Bird

Ft. William has excellent documents/systems/service. I seriously can't think of anything bad to say about them. I don't know about the others.

I could argue, effectively I think, that mere payment of the bill doesn't mean one had resources to pay it...who knows what kind of juggling was involved and will/would cause other bills to be not paid or past due? But setting that aside, don't we have to know if the plan uses the safe harbor definition or not? I believe that the "other resources" condition only applies for non-safe harbor provisions. if it uses the safe harbor, funeral expenses are ok, period.

I submit that the audit is not something that gives rise to a claim; that would be some event that is uncovered by the audit. As long as the client has no knowledge of such an event, I don't see the need to notify the insurance carrier. I'm not sure there's a downside, but there's a difference between being conservative and blanketing everyone with unnecessary information "just to be safe."

I agree w/ETK. The terms of the plan say it's a hardship and that's what controls WH and rollover eligibility.

You've got me confused as to what you are thinking and even what I'm thinking, but I guess I would summarize my position as: I chose to take it head-on and write a letter clearly, I think, disclosing my or my firm's compensation. But if you had a contract that already covered everything, albeit taking many pages to do it, that should be adequate, I'd think. I imagine the bigger the firm, the more lawyered-up they'll be, and their disclosures will look more and more like a contract anyway (and less and less clear).

I think that's what I'm saying/doing too. I thought you meant you were going to say "The DOL says we have to disclose compensation received from your plan - it's in the contract; go look at it if you want to."

No change in my comments. What's so special about an annuity that someone should get the "continuing benefit of their prior self-direction" that someone else shouldn't get? BTW, if you were to take my suggestion about letting it be part of the pooled account, I think it should be valued at market value, not surrender value, at the time of transfer.

That's one way to do it but it seems extreme. Another thing to think about is to allow in-service distributions at a certain age, maybe NRA, or 59 1/2, and then those participants can effectively self-direct (by rolling over to IRAs); anyone left would either be forced into a pooled account, or you could convert to a platform that will take care of the disclosures for you.

I believe the key phrase there is "...part of a lump-sum distribution." But we're talking about a plan-distributed annuity, so no, I don't think it's relevant. (I'm not 100% sure about any of this but am relatively confident, FWIW.)

Well. the American Funds service agreement that I know is maybe 8 pages. JH's is, I suppose, longer, as they are more expensive and try to create a cloud of confusion over the whole thing. Anyway, I decided to take it head-on and wrote a letter that I had them sign, if I or my firm was receiving any indirect compensation. Back to your question: if your clients signed something that included a description of what you are receiving from an investment provider, then I suppose that is adequate.

By doing that you are essentially saying that either one participant is allowed to self direct to the tune of $100,000, or that the trustee is choosing to segregate and invest $100,000 of that participant's account in an annuity (you seem to imply the latter). I do believe there are problems either way. Why not just treat the annuity as part of the pooled account? The plan can (should) be the owner and beneficiary, and the name of the annuitant doesn't really mean anything.

Generally speaking, I think you may fund such contributions on a payroll basis, or otherwise throughout the year. But I think it's a bad practice, terribly actually, for at least a couple of reasons... as noted, if you have an hours or last day requirement, you might be funding contributions that shouldn't be. or if you didn't really want to put that much in for a person, group, you might be funding contributions that shouldn't be. Now when you have those contributions that shouldn't be there, you have problems. You can't "forfeit" them because it has nothing to do with a forfeiture. You can, in theory, move them to another participant(s) in the plan to satisfy your actual desired allocation, but then, how do you handle the gains or losses that might have accrued on those contributions? That gets ugly very quickly. You could "just" add money for other participants, but that might not be desired, and doesn't solve the problem if someone shouldn't have anything at all. Also, if you are pre-funding HCEs at a higher rate than NHCEs, it could be discriminatory in practice.

Wow. That's what I've been telling clients they seemed to be saying but I didn't know they were actually thinking it. Unless 5 participants chose the same fund, then you have to provide info on that fund as if it is a DIA.

I haven't gone to the EOB to see exactly what Sal says but I don't think you can necessarily use the DOL's rules on when deferrals become plan assets in this context. I was actually going to "go there" in my first post but decided that although it's a neat thought, the DOL's purposes are completely different from this determination and not relevant. But you're probably a lot safer relying on Sal than on me!

I can tell you that in my office, they'd be included in the year deferred. I don't know that there's a definitive answer (there should be!) but in my mind, the timing of deposits shouldn't affect such things.

We give it to anyone who requests a loan or asks for the procedure. I think it's sufficient that the SPD inform participants about the loan provisions and they can get more details upon request.

Giving them the benefit of the doubt, they either don't understand that there are some plans that operate this way, or they are obsessively concerned with this being some kind of loophole, or...I don't know. I wouldn't say it's an attack on 401(k)s but it certainly drives everyone to platforms so in a way it's an attack on small 401(k)s - for small plan to get similar options with a platform there would typically be a $2,000 or more minimum. And, for those of us running plans this way, it's a huge change that's being done at the last minute.

We had one of these a couple of years ago and I concluded that it was not reportable. It's not a rollover, it's (I think) a qualified plan distributed annuity contract.

Thanks for the feedback. At least we see it the same way.

Q30 of the FAB (below) seems to blow away the "don't worry about the chart" mentality that I had with regard to brokerage windows "and similar arrangements" - that's my question; does anyone think a brokerage account arrangement (where there's no "platform", just accounts for each participant and they can do whatever they want) is not a "similar arrangement? They do use the word "platform" but I think it's a stretch to think that just because accounts aren't linked under (what I call) a platform they're not caught in this. (Kinda stinks that they would essentially re-write the regs in this way, late in the game.) Q30: A plan offers an investment platform consisting of a large number of registered mutual funds of multiple fund families into which participants and beneficiaries may direct the investment of assets held in or contributed to their individual accounts. Although the plan fiduciary selected the platform provider, the fiduciary did not designate any of the funds on the platform as "designated investment alternatives" under the plan. Is this platform itself a designated investment alternative for purposes of the regulation? A30: Paragraph (h)(4) of the regulation specifies that a brokerage window or similar arrangement is not a "designated investment alternative." A platform consisting of multiple investment alternatives would not itself be a designated investment alternative. Whether the individual investment alternatives are designated investment alternatives depends on whether they are specifically identified as available under the plan. As the Department explained in the preamble to the final regulation (75 FR 64910), when a plan assigns investment responsibilities to the plan's participants and beneficiaries, it is the view of the Department that plan fiduciaries must take steps to ensure that participants and beneficiaries are made aware of their rights and responsibilities with respect to managing their individual plan accounts and are provided sufficient information regarding the plan, including its fees and expenses and designated investment alternatives, to make informed decisions about the management of their individual accounts. Although the regulation does not specifically require that a plan have a particular number of designated investment alternatives, the failure to designate a manageable number of investment alternatives raises questions as to whether the plan fiduciary has satisfied its obligations under section 404 of ERISA. See generally Hecker v. Deere, 569 F.3d 708, 711 (7th. Cir. 2009). Unless participants and beneficiaries are financially sophisticated, many of them may need guidance when choosing their own investments from among a large number of alternatives. Designating specific investment alternatives also enables participants and beneficiaries, who often lack sufficient resources to screen investment alternatives, to compare the cost and return information for the designated investment alternatives when they are selecting and evaluating alternatives for their accounts. Further, plan fiduciaries have a general duty of prudence to monitor a plan's investment menu. See Pfeil v. State Street Bank, 671 F.3d 585, 598 (6th Cir. 2012). If, through a brokerage window or similar arrangement, non-designated investment alternatives available under a plan are selected by significant numbers of participants and beneficiaries, an affirmative obligation arises on the part of the plan fiduciary to examine these alternatives and determine whether one or more such alternatives should be treated as designated for purposes of the regulation. Pending further guidance in this area, when a platform holds more than 25 investment alternatives, the Department, as a matter of enforcement policy, will not require that all of the investment alternatives be treated, for purposes of this regulation, as designated investment alternatives if the plan administrator— makes the required disclosures for at least three of the investment alternatives on the platform that collectively meet the "broad range" requirements in the ERISA 404© regulation, 29 CFR § 2550.404c-1(b)(3)(i)(B); and makes the required disclosures with respect to all other investment alternatives on the platform in which at least five participants and beneficiaries, or, in the case of a plan with more than 500 participants and beneficiaries, at least one percent of all participants and beneficiaries, are invested on a date that is not more than 90 days preceding each annual disclosure.

The older I get the more negative my world view gets - I think incompetence knows no bounds of industry.

A - no, the payment made in Feb is for Jan, etc, and none will ever go beyond the cure period. B - 1 (Jan),2,3,4,5 are not made on time, then Jan is made in June, Feb/Jul, Mar/Aug...(assuming the max cure period), Jan is OK b/c it is made before Jun 30, but Feb is not since it is made after Jun 30. Default for the Feb payment occurs on Jun 30. C- Jan pd Feb, Feb pd Apr, Mar pd Jun...all paid within the cure period. Apr (2nd Q) pd Aug (3rd Q), still ok, May (2nd Q) pd Oct (4th Q), there's your default, on Sep 30. I had to work it out but that agrees with Belgarath.

Well, I'm a broker on some cases - I don't use open brokerage accounts but I'm not sure that's any different from a regular mutual fund account for this purpose - and I have always prepared a separate disclosure that shows the commission percentage.

I'm not sure I follow your options but it is when any missed payment is beyond the cure period. Chronically late payments that never go beyond the cure period don't trigger a default.

I think if you're going to do it right you need to un-terminate the plan and re-terminate it. But if the termination was effective in 2012 and the contribution was for 2011 that would be ok, IMO. Isn't there any liquidity in the plan to pay the taxes?!