Bird

No, the brokerage firm has to report indirect compensation.

Yes, the deadline for the renewal app is June 30, even though expiration is Sept 30. I remember getting a letter last year saying something about a renewal, but I knew that mine was due this year so I ignored it and assumed it was a generic letter to all and that I would get another this year. I didn't, but fortunately something made me think of it and I just renewed online. It's typical government stuff, with confusing and half-complete or inadequate instructions. The AIRE site says to go to the pay.gov site and says something to the effect of "once you pay, you can submit your application online", but it's the other way around. I can't recall all of the issues I had but the whole process was rather frustrating. It made me wonder if it's better to print the paper form and fill it out and mail it with a paper check. Somewhere in the mass of crap I waded through was a remark that said "you won't be sent a renewal notice." Kinda sucks if you ask me.

I think what they are saying is that XYZ mutual fund, chosen through an open brokerage window, doesn't have to report compensation. (They don't give a reason, but it has to be, at least in part, that it would be difficult at best for the fund to identify and report this information. Which is logical. But then again, does that make it any less important? Mmm.)

The good news is that the 401(k) is not tainted by the SIMPLE, it's the other way around. I'm not quite sure about how to handle the SIMPLE contributions, but I think I remember seeing something on the IRS website about how to fix. I don't think it's as simple as returning money - the investment company won't let money go out without issuing a 1099-R.

If it's being done repeatedly and is likely to continue then I think you have reason to be concerned. There's the "pattern of amendments" language buried in the regs and the Gold memo from 2004 (not exactly the same scenario but they left it open to other "abuses").

I agree with Bill on #1 and prior comments. But FWIW the tax-free part couldn't move to John's account; it would either have to be taken out or left in the plan in Jill's name because the tax-free part is not eligible for rollover. On #2, I think recovery of the tax-free part would be pro-rated, but why bother? Just take the tax-free part in a lump sum and be done with it. If you really want an annuity buy an annuity with that part, after the lump sum payout. #3, if John waives, it goes to Jill's contingent beneficiaries, not his. If that happens to be who he wants (and it probably is, their children), great, but the point is that he can't waive and direct that payment. The tax break would go to whoever received the payment.

There was wrong and questionable stuff said by both government and ASPPA speakers at the Mid-Atlantic conference Q&A. I wouldn't pay much attention unless it comes from the Annual conference, where most of the questions are written out ahead of time and discussed ahead of time by high-level IRS personnel. (Of course we've heard some questionable stuff there nevertheless, but at least it's worth talking about.)

I'm not sure if I can find a cite but logic says that the charity can't roll it over so they're shouldn't have been withholding. To get the money back, (I guess) the charity would have to file a return, even though it wouldn't normally have to.

That's my thinking as well. Just issue a new check and move on.

Caveat: I have some sort of mental block about controlled groups (and moreso about Affiliated Service Groups). I could be missing something... ...but, if we take your word for it that the companies get no revenue from each other nor share customers, then it's actually pretty easy. A and B are a Controlled Group, and while they don't have to offer the same plan, they have to be combined for testing purposes. S and N are unrelated and can do what they want. (I get a little suspicious about everything being unrelated when someone has fingers in so many supposedly independent pies, and your statement that "we" will be scrapping the plan in A when you have no interest in A makes me wonder. The planner who is telling you that all companies have to offer the same plan may be making assumptions based on those kinds of impressions.) It really needs to be evaluated carefully by someone with knowledge in this area and full details of your situation. But if you want to be cheap about it, start by challenging the planner who told you all companies have to offer the same plan - why?

Exactly. The evidence here (there is no account balance) indicates that the benefit was paid already. I'd certainly look or ask the client to look for proof of that, but the burden is on the (ex) participant, and I wouldn't pay anything without additional evidence that the benefit still exists. The SSA letter is simply evidence that a benefit used to exist.

I don't mean to be rude but I can't follow your message at all. 2011 is one year earlier than 2012, not later. And do you mean the broker is taking the blame for the "late" notice? Anyway, while it seems that there are numerous screw-ups, I can't figure out exactly what damage your friend has to gripe about.

I find it interesting that it says "...is an infant [not a minor]or incompetent by reason of physical or mental disability..." - as if the plan could/should pay it directly to the minor. (Is being a minor considered a mental disability?) I'd strongly urge the plan to get legal help. Ultimately I do think a custodial account of some sort is ok.

Well done and thank you for posting the conclusion.

If you're using this as an excuse to fish for congratulations - congratulations! (I would definitely use it now.)

Generally speaking, the employer doesn't have to do anything at all when someone is entitled to a distribution, unless and until they ask for it. There's not a lot of info in your post so it's hard to say exactly what's going on.

I'd think "fees for brokerage windows" is not mutually exclusive with "commissions" - i.e. both should be disclosed in advance on some kind of schedule. What you're describing isn't technically a brokerage "window" but I'm not so sure the drafters understood the arrangement you are describing. (I hope you are not creating the schedule, as the TPA?! I don't think I could be paid enough to do that.) From the regs: (3) Individual expenses. (i)(A) On or before the date on which a participant or beneficiary can first direct his or her investments and at least annually thereafter, an explanation of any fees and expenses that may be charged against the individual account of a participant or beneficiary on an individual, rather than on a plan-wide, basis (e.g., fees attendant to processing plan loans or qualified domestic relations orders, fees for investment advice, fees for brokerage windows, commissions, front- or back-end loads or sales charges, redemption fees, transfer fees and similar expenses, and optional rider charges in annuity contracts) and which are not reflected in the total annual operating expenses of any designated investment alternative.

Thanks! I missed that.

I think you can still submit for a DL upon termination. If you're using VS or prototypes, it will get somewhat harder as the years go on and the last FDL gets farther and farther away. I've stopped submitting on terminations for the most part. Considering the higher fees, the length of the process, reliance on master letters, I don't see a big risk.

A few more thoughts/comments... the idea, of course, is to let participants know the risk exposure in their plan, and it's not so silly in theory. In practice, I seriously doubt that one of "my" participants has given it a moment's thought. And frankly, I wouldn't do it myself, and I'd put my obsessive tendencies up against almost anybody's. I used to bring this up at ASPPA GAC meetings, and it was never a priority. I don't recall ever hearing that DOL even had it on its project list. Now that it's come up again, I think I'll write to my congressman and have a little fun with it.

Where I am the advisor I generally provide a detailed description of the payout to my broker/dealer (in percentage terms) and the contractual share that flows on to me, including a negotiated extra share. It's probably more than is necessary but I think it's only fair. I don't think the prospectus or platform service agreement is adequate, because it just says how much goes to the broker-dealer. The broker could get less than 50% to 90% (maybe even more) of the gross payout. I guess I should say it doesn't seem adequate in what I see as the spirit of the law. Honestly, I don't know. If I'm not the broker I tell (told) the client about the requirement and said (literally) "it's not my problem." I gave the brokers a heads-up and washed my hands of it; it's not the client's problem either; they are the ones who are to receive the disclosure.

Yes, we are still doing it. As I noted in the other thread, we reconcile everything and creating the list isn't that hard.

Apparently never. Yes we are including a list of assets (for the whole plan). I didn't follow the last part about the percentages, but if you are asking if it is ok to simply say "you have 9.51% of the assets in the plan", then no, I don't think so.

I'd argue that the capital account is utterly meaningless, as is cost. But as noted, it shouldn't really make any difference...what do they propose to do about it? Maybe they want to make a mountain just for the scenery.

I agree. There are some rules about disclosing fees on such accounts in advance and after-the-fact, and that might be technically problematic, but not enough to concern me on a practical level.