MoJo

Some would say it's a "plan asset" and therefore a reversion would be prohibited. Regardless, it's income generated through the use of plan assets and therefore would be a PT if paid to a party in interest ("use of plan assets for personal gain") - unless an exception exists (and there is one to allow for the payment of "reasonable fees" incurred in the operation of the plan - which is how you get paid...).

"It effectively makes the payroll deduction irrevocable and enforceable by the plan," Q: Have any authority for that? Absent specific authority, I have to go with state law on this one - which in many cases makes deductions from paychecks subject to REVOCABLE consent of the employee..... You could, I suppose, make it a condition of default of the loan should the employee revoke consent, but it's probably going into default anyway....

You know, just because something involves a retirement plan does NOT mean state laws are preempted by ERISA. NOTHING in ERISA deals with payroll deduct as a loan repayment means. The ONLY thing ERISA requires is that it be "a legally enforceable obligation" and that USUALLY means looking to state law to see what is enforceable. If state law says you can't take more than x% out of a paycheck, and that affects the legal enforceability of the obligation, the so be it - ERISA does not preempt as the state law is NOT inconsistent with any requirement of ERISA (a prerequisite of preemption). Indeed - there was such concern over "autoenroll" plans in some places as those jurisdictions REQUIRED "affirmative" consent to ANY deductions from pay, other than those ordered by a court (garnishments, support payments). While the courts NEVER finalized a conclusion on the issue, Congress actually put a provision in one of their pieces of legislation that 1) specifically authorized autoenroll; AND MANDATED THAT AUTOENROLL PROVISIONS PREEMPTS STATE LAW TO THE CONTRARY. Would have been unnecessary under the philosophy that anything touching a plan is preempted. I'd look into state law FIRST, and determine if there is a state law on point - and then decide how best to proceed Guess wrong and the plan sponsor could have a very expensive legal bill to justify preemption and/or rectify the situation. Sorry to get on my high horse - but "preemption uber alles" is simply not the answer....

Baseball? "What's baseball?" says one in the Cleveland, OH area.... Now, if you want to talk about a real sport like LeBronBall, er basketball, I'm all ears....

Time to find a new service provider. If NOTHING changed, AT THE WORST CASE, the new plan document became effective 7/15 when signed. SO????? The old plan document was still effective until the new document became effective - and the plan should have been operated in conformity with it's terms (since NOTHING changed). Many (idiot) service providers seem to think that it is a "new" plan when they put it on their document - and try to enforce "new plan rules" (and even then, they often get those wrong). Nonsense. Even so, I agree that the "retroactive" aspect of this is a non-issue.

"enforceable under applicable law (i.e state law) means yes, they have to track the differences in state laws. And many already do so for distribution taxation AND deferral taxation. AND, anyone with employees in variety of other laws they have to contend with. The simple answer is to offer loans.... Austin: Your logic would put you at the top of the heap in the current SCOTUS (says one whose right to cast a vote AFTER work hours were shut down by the Court YESTERDAY)

The tax is actually a tax levied on the borrower. Remember, for a loan to be valid under ERISA it must be enforceable UNDER STATE LAW. In Florida, only those loans with "stamps" affixed are actually enforceable. Austin: In answer to your question about how many service providers do this? Don't know, but Schwab, Wells Fargo and NYLIM do.

This law has been around a long time. When I worked for a large bundled recordkeeping shop, all FL loans were handled separately from the rest. I think preemption simply doesn't apply as it doesn't affect an ERISA right. A "tax" on a loan doesn't mean you can't take the loan anymore than a loan origination fee or any distribution fee affects loans or distributions. Just because it touches a retirement plan doesn't mean it's "preempted" by ERISA. If that were a case, then state and local taxes on deferrals and/or distributions would be preempted as well (and I'd argue for that!).

I work with people who have access to and use two such vaults. One was custom developed by the financial advisor group (large, multi-office) and mirrors a "checklist" of likely documents requested by regulatory audits (DOL or IRS) - so it contains plan docs, investment reviews, fee disclosures, service provider contracts and a bunch of other stuff. Frankly, I think it's more of a marketing tool than an actual one (meaning, they hype it to prospects, and use it to store things, but mostly clients ignore it - and if they ask for a document, someone emails it to them anyway (nothing with identifying info/SSNs, etc). It isn't used for any "admin" type of documents, or transactional info - so secure emails isn't linked in any way. The other vault available is an LPL provided solution (for their advisors) - which is similar to the custom vault. Keys to consider are ease of use for BOTH the one storing the document and the ones retrieving the document; the types of documents stored (are they "archived" or active?); and ease of use for the one storing the document and the ones retrieving the document (yes,I repeat myself because NEITHER one of the vaults available tot he people I work with are really easy to get things into them (but are pretty straight-forward in getting thigs out of them. Check out this article for some of the issues. Not sure what your business is, but this seemed to resonate with me: http://www.kitces.com/blog/have-financial-advisors-gotten-off-track-with-client-vaults/

I've used Penchecks as well. People I trust have said Penchecks is easier for a handful of searches at a time, Inspira is better if you have a lot of searches to do (plan termination, etc.).

Agreed on the IRS - but alas, no more. There are pay services as well. I've used Intellius.com with some success. Of course, Berwin, Inspira, and others will do it as well. What amazes me is that people leave money on the table, and even when notified, don't collect it. I had an abandoned plan with $500k spread over ONLY 9 participants. I found 7 of them, and only 2 took the money. The rest - rolled over to ETrade IRAs where they will escheat at some point in time. p.s. I don't think ETrade will take such rollovers anymore - but Inspira will.

LinkedIn, Facebook, Switchboard, and others.

I think our most significant difference of opinion, Austin, is whether or not it is the new TPA's responsibility to obtain/track old documents, or, in your words, avoidance of the perceived big project involved in getting them/maintaining them. I'm in the midst of a search for TPA services for a client who recently acquired another company, has a mix of union and non-union plans, a DB plan, and not a lot of staff to coordinate it all. A significant portion of the RFP (the answers to which I truly am currently reviewing now) includes the issues we're discussing - gathering, reviewing, maintaining and archiving of important plan documents (especially considering this is a company grown through M&A activity, with "history" out the wazoo). Can't/won't provide the service? D*E*S*E*L*E*C*T*E*D, regardless of the other service offered (which, basically, are the commodity "testing" services). I think it's a good idea to inform your clients of the requirements of document preservation, but I disagree that "the IRS has gone off the deep end" as that implies there isn't a valid reason for their requesting the documents.... There is. Portraying the requirement as "silly" leads clients to think it really isn't that important. It is. Just last year I dealt with 13 clients that were "non-amenders" at some point in time (one was actually a "virgin" ERISA document established in 1979 and NEVER updated (special case)..... 10 of those were under "audit" (7 DOL, 3 IRS) and the "chain" of documents were found to be deficient. Of those 10 - ALL had current valid documents (because we wrote them) but were missing previous restatements and/or interim required amendments. They haven't gone off the deep end - they are simply enforcing the rules. Maybe more vigorously than before, but the rules, nonetheless. And by the way, 8 of those 13 (including the "virgin" document) came tot he TPA I was working with BECAUSE of the prior TPA not being thorough.

"What (if anything) should a TPA tell its client about how long to keep a document or record the TPA prepared or furnished?" ...forever... and everything we send a client (except for birthday greetings!) contanis: "This document should be retained as part of the permanent plan records. We've filed a copy of this document in your e-vault, but you should retain a copy as plan sponsor, as well." And the people I work for offer services to collect and e-store that information. If the relationship terminates, the client gets a DVD burned with EVERYTHING.

First, I said nothing about your capabilities, or your business model. What you said, however, is that you have every single document YOU wrote. What about the documents you wrote those documents from? In other words, what about the prior plan document - and unless your business is exclusively start-up business, there will be prior documents that must be taken into account when drafting a new document. Second, I cal BS on your comment that I don't work in the real world. I have worked for TPAs, bundled recordkeepers, law firms, financial advisors and corporations. I've been in this business since 1982 (DEFRA, TEFRA & REA have my teething marks on them). I support ALL of the clients of the current FA's I'm associated with, and that includes over 350 clients nationwide, with a little over 12 billion in assets. They range from sole proprietorships to Fortune 100 companies (and yes, there are differences in approach to business - but MY job, and the job of the FA's I work with is to make sure these clients - ALL OF THEM, do things the right way. And regardless of which entity I've worked for over the last 32 years, the mantra has ALWAYS been the same. Preservation of historical documents is a MUST - until the plan terminates and the statute of limitations runs (and even then, just to be safe, keep them longer). And by the way, when I managed "conversion teams" at both bundled recordkeeper and TPA firms (the most recent being at a TPA in the small/micro plan market), WE ALWAYS START WITH THE PRIOR DOCUMENTS, AMENDMENTS, DL's, AND EVERYTHING ELSE WE COULD GET. Do they always have it? No, but part of our job was to find it, document what we couldn't find, and consult our clients on the risks they've undertaken - and not to do it again. Frankly, if they don't, we encourage them to seek other assistance because it isn't worth the effort to keep bailing them out. It's amazing how cooperative they are when you explain to them what the rules are, what the consequences are if they fail to follow the rules, and how much you'll charge them if they don't. And for the record, until last year, I worked as an employee of a TPA - dealing in the micro market (100 employee companies were rare) and it was the same thing there - we worked to keep our clients on the straight and narrow. Get a clue Austin. This business is about keeping clients OUT OF TROUBLE. They look to their service providers (ALL OF THEM) to do so. Much of this business is a commodity. The differentiators are getting smaller and smaller. And when a problem arises, the easiest and fastest fix is to dump the TPA - whether it's their fault or not. FA's are real quick to lay blame on someone else - and the TPA is "in charge of the documents." This is especially true in the under 100 employee market space.

Searchlight: Plan Documents Are Forever. Amen!

"And I think you'd be shocked at how many of your clients cannot find a document more than 10 years old. After all 10 years ago, they were in a different office, with a different CFO and using a different provider (all made up facts but very very realistic). Would it surprise you to know that I have clients who have forgotten to fund their 401(k) contributions for a pay-period?" No, i wouldn't be shocked. In fact, I make my living working for TPAs, Financial Advisors, and their clients fixing stuff like this. What does shock me is that after ONE of their clients gets hit with a penalty (the largest I've seen was "disqualification" costing the owner of a two employee business 75% of his $500,000 account balance), there are still TPAs and advisors out there who don't take this stuff seriously, and KEEP BETTER RECORDS, and BEFORE IT'S TOO LATE, go back to prior service providers and collect EVERYTHING you can before they retire, die or go to jail. "I can tell you that as a general rule on audits I have not as of yet been required to provide such ancient documents (at least on a regular basis). This seems to be a new trend..." I don't know where you are, or what your business looks like, but in Ohio, southern Michigan, western Pennsylvania and northern Kentucky - where the bulk of my business is, it's been routine for quite some time to have to produce BEFORE the audit, the PRIOR restated documents and all interim amendments. Even in southern California (where I also do business for an advisory group) it's pretty common for both the IRS and the DOL to ask. Indeed, that group (and all it's branches) has a checklist compiled by comparing all of the regulatory audit requests and listing the common items EVERY auditor asks for - and have designed their e-vault to hold ALL of those documents. Do all of hteir clients have them all? No, but WELL IN ADVANCE those clients are made aware of the risks and, at least, change their behavior going forward.

"Well clearly you set the bar very high for mere "adequacy." I only hope your clients are able to live up to such high expectations." Being snide does not become you, Austin. I don't think this is a very "high" bar for "adequacy. I think it is a minimalist bar for one who engages in a business who CHOOSE to sponsor a retirement plan, and the barest of minimums for professionals seeking to assist those who engage in such endeavors. Set the bar any LOWER, and your client get's a painful awakening when a regulatory audit comes around.

I think escheating to the state is clearly not the path to take..... My preferred approach is roll-overs - even of very small balance (with the exception that anything below the "cost" of distribution is "forfeited).

Any business has record retention requirements. It matters NOT how large or small it is. Gee. My mom was an antique dealer - and she had to maintain records of 1) purchase cost; 2) sales cost (the difference between one and two being gross revenue for tax purposes - and sometimes the difference between purchase and sale could be YEARS. Indeed, she's been dead for 8 years now, and my brother and I have her remaining inventory, and I could tell you exactly WHEN and for HOW MUCH she paid for each item - some being bought in the late 1970's)); 3) taxable and non-taxable sales (sales to other dealers being non-sales taxable); 4) other expenses (including mileage for travel to buy or sell her inventory); and 5) every sales tax "license" for each state she ever sold anything in (she used to do antique shows in 7 different states) - AND be able to produce all of that anytime a regulator requested it (and state sales tax agents ROUTINELY audited people at shows). She owned a computer (a desktop) that was used only for playing Solitaire.... She was a "one woman" business. Not difficult - even for a computer illiterate senior with an accordion file, bound notebook and a pen. So, YES, I expect EVERY business to retain the relevant documents for their business - and that includes historical plan documents.... And by the way, "a successful CPA" with 5 or 6 employees - CHARGED with reviewing other peoples records OUGHT to be able keep his or her own in order.... I'll bet they can find their tax returns and the documents used to create them....

You know, businesses have to retain documents for ALL kinds of purposes. If they don't/can't, well, frankly, maybe they shouldn't be in business.... In the DB context, plan sponsors have been retaining records for DECADES - just so they can calculate the benefit when due. Most "good" service providers will retain the documents as a convenience to their clients - but that isn't an excuse for the client not to save copies as well. If they don't, then that, in my humble opinion, would be a reason to find another service provider. Most "good" service providers will check with the client/former client BEFORE they purge documents (because, guess what - they don't actually "own" them). "Good" service providers will ask for them when they bring on a new client, because, gee - if you are operating the plan, you want to make sure it's done right, and history can have a bearing on that (and many, many times, current documents have an inadvertent change from a prior document, and the plan is operated inconsistently with the "current" document, but consistently with the prior document). I work with a couple of accounting/plan auditing firms providing a "pre-audit" audit (an audit before the DOL or IRS comes in). Number 1 on the checklist is current, complete, executed documents. Number 2 is historical document (complete, executed) back as far as possible. If they can't find or produce docs back to GUST, we start contacting ALL current and prior service providers to find them - and then prepare the client for what could happen if the plan is audited by the DOL or IRS. Fore warned is fore armed. Scanning, filing, backing up, storing and the like are very, very, common business practices and have been for many years. Not doing so just isn't an "excuse" anymore. Heck, I'm a sole practitioner working from a home based office, and I have a NeatDesk scanner and software and about 8 terabytes of storage/backup, plus cloud backup services for my and my client's documents. Total cost, less than a grand - and when I need more storage, I just add another NAS storage unit.... I really don't think it's an onerous requirement to have to maintain files of operative plan documents back to the preceding restated document.... p.s. I have every tax return I ever filed - both as a pdf, and as a TurboTax file (ever since I've been using that software (quite some time))....

"$5,000 and $10,000 for not having a GUST document that was 12 years old??? The humanity!" It's all about revenue generation.... Didn't you know the IRS and DOL are "profit centers"? Continuity of "qualified" documents is a requirement for the plan to remain qualified currently. Problems in the past continue to the present.

"IF he has to cough up $3,000 (plus attorneys fees) for not finding a document that is 12 years old, I will be advising that he calls his senator!!" Senators cost a lot more than $3,000.... Sorry - couldn't resist. First, my experience is that they ALWAYS ask for the prior document - so I'm surprised this was an "afterthought." Second, I have had "some" success in showing through other means that the document existed and was valid (a determination letter helps, corporate resolutions, ancillary documents (SPDs, etc.), emails and other correspondence...). It doesn't "eliminate" the problems, but may lessen the impact (penalty). Third, reminds us that when bringing in a new client, we should have on our "checklist" prior documents, prior service providers, and their policies on document retention. Better to solve the problem (if possible) at that honeymoon stage of the relationship....

IRC Section 403(b)(12)(A)(ii) provides: (ii) all employees of the organization may elect to have the employer make contributions of more than $200 pursuant to a salary reduction agreement if any employee of the organization may elect to have the organization make contributions for such contracts pursuant to such agreement. ... For purposes of clause (ii), there may be excluded any employee who is a participant in an eligible deferred compensation plan (within the meaning of section 457) or a qualified cash or deferred arrangement of the organization or another annuity contract described in this subsection. Emphasis added. As long as the (k) plan covers those employees not eligible for the (b) plan, you pass universal availability.

I agree with QDROphile - and would add that where I've seen k's and b's in the same employer - each plan was for different employee groups. Indeed, in the medical field, many times you will find a "conglomerate" (controlled group, if you will) that has multiple not-for profits and for-profits under the same umbrella. Clearly the for-profits can't participate in a 403(b), and "legacy" 403(b) plans can't be "converted" to a k plan. So, plenty of mixtures.....