MoJo

The DOL certainly does favor discretionary voting by a fiduciary - but in most cases, Trustees are unwilling to do so - preferring to hide behine the veil of being a "non-discretionary, directed trustee" who won't do anything absent explicit direction from the plan sponsor (as a fiduciary). Of course, you now have the problem of "management as fiduciary" directing the trustee, most likely to vote consistent with "management as management" - a potential conflict of interest, that may not be consistent with the precepts of ERISA. In the past, several of the trustees' I've worked for have given participants "two votes." The first being "vote your own shares" and the second being "vote a proportional amount of shares otherwise not voted" which (presumably) means there never will be any shares unvoted for which the trustee has to excercise some discretion (God forbid!). Of course, the DOL would say, even in the case of a non-discretionary directed trustee, the trustee is still a fiduciary, and would have to determine 1) if the passing through of votes to participants is consisdent with fiduciary obligations under ERISA; and 2) if the inconsistent voting of shares (some in favor, some against any particular issue) is ALSO consistent with ERISA. In cases of extreme importance (sale or merger of the company, etc.), I think it would be prudent to hire an independent, discretionary fiduciary (there are people who will do this - i.e. U.S. Trust - a sub of Bank of America) to make the call.

Interesting that no one has added what I would consider the most important: 1) Protection of individual rights and liberties. All of the rest, imho, flow from this one....

Typically any income generated from any investment in reinvested back in that same investment. So, dividends on the company stock fund will be reinvested in additional shares or units of company stock - as would be the case for any dividends or gain distributions paid by any mutual fund held within the plan. In some cases, if the plan is appropirately designed, a participant may opt to receive payment of dividends on employer stock in cash - paid "through" the plan....

Rockies? Sox? Those are teams that did well LAST year.... - the season now being over Chief Wahoo will rise again!

ERISA has an "exclusive benefit" rule that provides that plan assets can ONLY be used to provide the benefits offered under the plan, and to offset the reasonable and necessary costs of administering the plan. Providing advice (and having the plan pay for it) is probably an appropriate plan expense, but having advice that provides advice for non-plan assets would not be. That said, advice can take into consideration outside assets when determining the appropriate investments within the plan, but cannot advise on changes to those outside assets.

3-1 Tribe! I live in Akron (20 miles south of Cleveland). 'Nuff said.

Well, I hope there is reincarnation. I'm going to need a second lifetime to accumulate enough to actually retire. Now, if I can only figure out how to draft a will that will leave everything I own to myself in my reincarnated life.... Any suggestions?

No doubt there is at least a fiduciary issue in ignoring the raping the participants will be taking from a fee perspective, and, to the extent the sponsor believes it is getting something of value in return for placing the plan with the bank (which to me, anyway, seems obvious) I would argue it clearly is an Exclusive Benefits issue. Some employers just don't listen. I expect we'll be reading about this sponsor in a DOL release someday.

Uh, pardon my jumping in, but MJB, you are correct in saying that the bankruptcy does NOT stay repayment on the participant loan as it does with respect to other debts of the debtor, but as I read the original post, the loan is in fact in default (that is, payments haven't been made, I presume) and hence, I think you can deem the loan.

Most of what they call me is unprintable, but some of the titles (in no particular order): Director, ERISA Services (totally made of for PR purposes); Field Vice President (what's on my business card); Buddha (and I'm told it's not because of my physique...)

As often as necessary to fulfill their fiduciary obligations.... Making that decision is itself a fiduciary decision.

That's my point, WDIK. It is an uncalculable risk, and that indeterminate factor substantially increases the risk of a plan loan. In other words, you can't compare a plan loans (apples) to other credit (oranges) to determine which is lower cost potential cost. So the discussion about lower interest rates and a plan loan as an investment misses the point.

Pardon my jumping in, but I too am starting to "chafe" at some of the comments. With respect to a loan as an investment: It is an undiversified investment subject to to risk incalculable - unlike any other investment. First, it is subject to an interest rate risk that may be difficult to quantify - while a prime plus one return today may be better than a money market, two years out it might not be (and since prepayment on a plan loan generally means prepaying IN-FULL, cashing out of the "loan investment" for better alternatives may be impractical - as opposed to cashing out of a money market inside the plan). Second, it is subject to market risk - that your employer's labor needs may change and you now have a huge burden (repaying or tax) at a time when you can least afford it. This by itself should be a huge deterrent to a plan loan - as it PERMANENTLY removes the loan balance from your tax sheltered portfolio. To propoerly evaluate the real cost of the loan, you'd have to factor in the (unpredictable) likelihood of forced default and calculate the loss (permanently) of the compounded tax benefits of money remaining in the plan. Can't be done with any degree of accuracy. Finally, when you compare a 5% plan loan rate against an 18% credit card rate (well, first, consider that if you are paying 18% you should question your creditworthiness and ability to repay the plan loan first - I haven't paid over 2.99% in years on credit cards until very, very recently) consider the positive compounding of leaving the cash in the plan for say 20 or 30 years against the "negative" compounding (ever decreasing balance) on the credit cards, and in many cases, the positive compounding in the plan will produce a greater cash reward at retirement than the total cost of interest on the credit card. Factor in the protections given to qualified plan assets and the discargeability of credit card debt in bankruptcy, and I think plan loans should be considered an absolute LAST RESORT for cash. You end up literally mortgaging your future....

The way I've always seen this done is to offer an entry into the contest absent any other action (but offer an automatic entry into the contest if you enroll). Actually, what I've seen work best is to offer an entry for attendence at a voluntary meeting (or one-on-one session). Get 'em in the room, and you have a better chance of enrollment....

OK, Here's what I have so far.... 2. The First noel 4. It Came Upon a Midnight Clear 5. Silent Night 6. The 12 Days of Christmas 7. Deck the Halls 8. Santa Claus is Coming to Town (You better watch out, you better not cry...) 9. Joy to the World 10. Rudolph the red Nosed Reindeer (You know Dasher and Dancer....) 11. I Saw Mommy Kissing Santa Claus 13. Hark the Herald 15. Oh Holy Night 16. All I Want for Chrsitmas is My Two Front Teeth 19. White Christmas 20. The Christmas Song (Chestnuts roasting o'er an open fire....) 22. Old Little Town of Bethlehem 24. I'll Be Home For Christmas 28. Jolly Old St. Nick 29. Good King Wencelas (or however you spell it...) 31. Jingle bell Rock That's more than half. I don't think that is too bad.... Anyone else out there with anything to add to the list?

Stop it! Just Stop it! Oh well.... There went my morning....

or busy at puzzles, and good at hiding from the boss. Things are sloooooooowwww!

and who says benefits geeks have no "breadth." I bet mere lay people don't even know what a wapiti is!

Thank you WDIK! It was begining to get to me that I couldn't get those.... MoJo

I know, I know - get a life.... Oh well... Expect My Arrival At My Domicile For Yuletide I'll be home for Christmas The Primary Carol The First Noel Tinkling Chimes Stone Jingle Bell Rock My Singular Desire For The Impending Yuletide Season Is A Pair Of Central Incisors. All I Want for Christmas is my Two Front Teeth Precious Metal Inverted Cups With Clappers Silver Bells Righteous Darkness Oh Holy Night Celestial Messengers From Splendid Empires The Yuletide's Dozen 24 Hour Intervals The Twelve Days of Christmas I'm Fantasizing Concerning A Celebration Day Without Color White Christmas The Event Manifest Itself At the Onset of a Transparent Day It Came Upon a Midnight Clear The Diminutive Male Of Less Than Adult Age Who Plays A Percussion Instrument Little Drummer Boy The Seasonal Tall Coniferous Plant (Woody?) Oh Tannenbaum Proclaim It To the Hills Go Tell it on the Mountain Diminutive Nazarene Municipality Oh Little Town of Bethlehem During The Dark Hours When Herdsman Supervised Their Charges Are You Listening To What I Am Listening To? Do you Hear what I hear? The Mannikin Of Crystalline H2O Frosty the Snowman The Event Occurred At One Minute After 11:59 PM, Visibility Unlimited It came Upon a Midnight Clear Tinkling Cup Shaped Metal Pieces Jingle Bells Loyal Followers Advance Oh Come, All Ye Faithful Are You Detecting The Same Aural Sensations As I Am? Do you Hear what I hear I Apprehended My Maternal Parent Osculating With a Corpulent, Unshaven Male In Crimson Disguise I Saw Mommy Kissing Santa Claus Delight For This Planet Joy to the World Please Permit Crystalline Formations To Descend Let it Snow! Let it Snow! Aged Matriarch Plowed Under By Precipitous Darlings Gramma Got Run Over by a Reindeer Our Desire Is Your Yuletide Cheer We Wish You a Merry Christmas Casteneous Colored Seed Heated In a Conflagration Chestnust Roasting O'er an Open Fire (The Christmas Song) Season Without Color White Christmas Listen, The Heavenly Messengers Harmonize Hark, the Herald Angels Sing Caribou With Vermillion Olfactory Appendage Rudolph the Red Nosed Reindeer Soundless Nocturnal Period Silent Night Happy Elderly Martyr Without Five Cent Pieces Bipedal Traveling Through An Amazing Acreage During Mother Nature's Dormancy Walking Through a Winter Wonderland Omnipotent Supreme Being Tells Happy Males To Relax Oh Rest Ye Merry Gentlemen In Another Place Meant For Bovine Storage Away in a Manger Tranquillity Upon The Terrestrial Sphere Peace on Earth The Approach Of The Holiday Commemorating The Birth Of Christ Is Becoming Evident What Offspring Abides Thus? What Child is This? A Visitor Is Coming To The City Santa Clause is Coming to Town Embellish The Corridors With Large Sprigs Of Berry-Bearing Evergreen. Deck the Halls

Too clever, and apparently not busy enough..... Don't tell my boss.

That's OK. Some of the others I struggled with.... Happy Ho Ho!

24. Hi Ho! Silver (Bells)!

I agree completely, Alan. My thought was that if the wire was wrong/not received, then yes, you'd have to sell the recently purchased funds, possibly at a loss. This happens to be a DB plan, so there wouldn't be a participant account issue, but.... I don't think any sort of agreement or indemnification would be worth the paper it was written on. This is a very very small risk, but potentially a huge issue if it goes wrong.

Just trying to get a sense of what is industry practice here... I work for a bundled service provider (both DC and DB), and our typical process on placing trades for new plans to us who's assets are transitioning to us is to have the prior service provider place "sell" trades on day one, wire us the proceeds of those trades on day two, and (provided the wire "hits" in time), for us to place "buy" trades the afternoon of day two, settling those trades the following morning. Essentially, the plan is "out of market" for the one day (selling out at the close on day one, and buying back in at the close on day two). A new client wants us to place the "buy" trades simultaneously with the sell trades that the prior provider is making (on day one) and settling those buy trades on day two with the proceeds that the prior provider will be wiring to us that same day. At issue are 1) the fact that we won't know what the proceeds of the sale trades are until after the market close (they are daily valued funds, traded at the closing NAV), and hence we won't know the amount to place the buy trades for (unless we would engage in after hours trading - WHICH WE WON'T!) - so we'd have to do an estimate on the buy trades (90% or so) with a true-up on day two; 2) by placing the buy trades prior to receipt of assets, are we extending credit to the plan (even though we theoretically don't have to settle those trades until after we're expecting to receive the proceeds from the sell trades), and if so, is this "incidental" such that it isn't a PT under various DOL guidance, including Advisory Opinion 2003-02A; and 3) what happens if for some reason: a) the sell trades don't settle on day two; b) the sell trades don't settle early enough on day two for us to wire those funds out in settlement of the buy trades; or c) the wire to us just doesn't happen on day two. The new client (a money manager, by the way) and their consultant (a rather well respected regional player) both "insist"" that "everybody" does same day trades on conversions and we should as well. Interesting that the three service providers I've spent my career with thus far have never done same day trades on conversion. Of course, in the day today operation of a plan, we routinely place sell orders and buy orders for plans simultaneously (per participant direction), but in those cases, we typically are functioning as sub-transfer agent for each side of that transaction, and have a process in place for routine settlements. In the conversion in scenario, we're somewhat at the mercy of the prior to do that which they say they will do (and I have no reason to doubt them). Any viewpoints?