Santo Gold

The financial advisor is giving investment advice to the participants. I do not know how specific or tailored it is to each participants. The trustees have picked the investment choices available to the participants, based in part on the FA's advice. Commissions are paid; this is not a fee for service arrangement. The FA is saying that their is an indemnication agreement with the trustees that will hold harmless the FA for any investment performances, and that therefore he is not a trustee. Can this be true? FYI, based on the link the EAIE provided, there are instances where FA's will not be considered fiduciaries. I need to research further to see if that applies here.

If an employer uses a cash basis for company accounting purposes, does that mean that the company's 401k plan must also use a cash basis? For example, if the company decides to make a $20,000 profit sharing contribution in Feb. 2006, because it is using cash accounting, it would show the $20,000 on the 2006 tax return. Would that mean the employer could only allocate the $20,000 based on 2006 wages (pro-rata allocation). And since the 2006 wages will not be known until 12/31/2006, they could not be allocated until probably 2007?

Thanks for the great link. Financial advisors can limit their services to avoid fiduciary responsibility, per page 3. Very informative.

Is a financial advisor automatically a fiduciary for a plan? I looked up the definition of fiduciary and read that "...a person who renders investment advice for a fee or other compensation, direct or indirect, with respect to any assets of the plan, or has the authority to render such advice (even if not actually rendered), is a fiduciary". In my specific situation, the financial advisor will receive commissions on the assets, but I take this to mean something different than receiving a fee or compensation. Also, all assets are self-directed. Thanks for your help.

My wife's grandmother passed away in 2004. Aside from a few thousand dollars in her bank account, her estate consisted only of her house. Back in 1999, she had a will made, in which she named my mother-in-law and her sister as her beneciaries, 50/50 split. At that time, the house was put into all three of their names, with each owning a third of the house. So the house is now about to be sold, with the sale price around $130,000. The 2 sisters will split it 50/50. But is their any type of inheritance tax or income tax in this situation? Someone from the closing company called and stated that since the grandmother owned 1/3 of the house at the time of her death, that taxes will have to be taken out of her share of the sale price. But if the will states that only the 2 sisters are getting the proceeds, does this make sense? An attorney will be brought in to sort this out, but I was hoping to hear from others what they would expect in this situation. Thanks.

In Ohio, our 4 seasons are known as: almost winter, winter, still winter, and road construction season. Graduated from college and somehow fell into the retirement plan field, and have been at it for the past 12 years. Our company's structure puts me into a lot of situations where I'm working without a net, hence my hobby of making frequent posts on benefitslink looking for help or verification. I try occasionally to offer my own input to others on this site, or at least try to sound like I know what I am talking about. Like the old saying goes: " You can fool all of the people some of the time, and some of the people all of the time.....and those are pretty good odds".

RTK: I think I meant to say that. My concern centers on this: If the sponsor adopts an IRS approved prototype, the sponsor has assurance that the form of the document is OK. As long as the sponsor does not change the approved prototype in any way, adopts it timely, and complies with the language contained therein, the use of that document can be relied upon as a legitimate plan & trust (assuming trust language is contained in it) and the plan will enjoy the tax qualified advantages offered under 401(a) (Ongoing operation might jeaporize that, but I'm concerned right now just about the document). So, given that the preceding requirements are met, regardless of the legal disclaimer that Janet M mentioned, we would have still have a qualified plan document. Am I right? Thanks to all.

Janet M: Regarding your second post.....I would think however that if their documents have favorable IRS opinion letters, that the disclaimer is somewhat not applicable. If a prototype has the IRS blessing, and a sponsor uses that prototype, all is well, regardless of the legal CYA on their website. Would you agree?

Has anyone heard of or used Fort William online document services? They offer prototype and volume submitter documents at what seem to be impossibly low prices. Their website doesn't indicate who is responsible for their product. Buyer Beware of course, but has anyone worked with them before?

Thanks Pax. This is a pretty straight forward union 401(k) with ind accts, all with 1 fund family, and it does not appear that any of the exceptions to filing the accountants report apply. I'm going to check back with the cpa. Sometimes I think "read the instructions" should be named honorary moderator of all of the boards at benfitslink

I have a collectively bargained plan with about 150 participants. Is an accountant's report still needed to be filed with Form 5500? I would assume yes, but I have an accountant who is saying no.

Employer wants to start a 401k plan and wants to have life insurance as an option. He has money in an IRA that he would like to rollover into the plan, and use either some, most, or all of the rollover to purchase a life insurance policy. Is it allowable to purchase insurance with rollover money, and is it discriminatory if only he purchases the insurance (ie, no one else wants insurance)? Thanks

We've already done that, and the clients response was: 1. They are happy with us 2. They are suprised we knew about this 3. They are not real "serious" about doing anything right now, but if they like what they hear, they will give the current financial guy an opportunity before making any final decisions. I informed her that we will make a proposal with the new person. I was just looking for thoughts on how to handle the situation with the current advisor. He brought us in on this case, as well as several others. I feel like a cheating spouse if I bid on this with someone we do not even really know, which would take the business away from the current advisor. The client did request that we not say anything to the current advisor just yet. I understand that business is business, and maybe we should quote and leave it at that. It just seems that if this progresses to the point where they do look to make the switch, current advisor will eventually learn about our involvement and sour future business with him.

Our firm works with many different financial advisors and performs only tpa services (no investment/insurance product sales). We are also approved/recommended tpa's for several larger fund families. Recently, we received an email from one of the mutual fund families requesting that we provide a fee quote on a plan that we already handle the admin for. An outside financial rep got in touch with the client and will be proposing new funds, options, etc, and the fund house contacted us requesting that we provide this rep with a quote. Can anyone offer their advice on how to proceed? To do nothing would jeopardize our tpa role in the plan, and yet to offer a quote would seem to be going behind the back of the current financial guy who brought us in. Our fee quote would likely be less than what they are currently paying since the new investment structure and platform would reduce the services that we provide. Any thoughts are greatly appreciated.

I'm sure someone has a ready answer for this. I purchased a laptop about 3 years ago when in hindsight, I was better suited for a desk top (and could have saved about 50% on the cost). In fact I am essentially using it as a desktop at this point, and that is where my question comes up. Since I rarely have to move it around, it is plugged in (ac/dc power) almost always. Rarely do I need it to run on battery. Therefore, it is always fully charged. Is this a problem now or will it be one in the future? I've had 2 different friends in high IT places who have provided opposite answers. FWIW, it is a Dell Inspiron 8200.

Company owner has a 401(k) plan and wants to rollover about $16,000 in after-tax money into the plan. Assuming that the plan allows for after-tax money and assuming the TPA accounts for this money separately (tracks pre and post money separately), is this a problem? Also, is there any special paperwork that needs to be completed to accomplish? Thanks

Grin and bear it may work best in this situation. Thanks.

I already know the answer to this question, but wanted to see how others felt. A two life 401k plan was adopted in 2004. Plan covers owner and the only other employee. We did the 5500 and SAR for the plan. The owner calls back and says that the asset section of the SAR is a little too specific, since with only her and 1 other employee, it is too easy for that other participant to figure out the owners account balance, contributions, etc. Could we revise the SAR to eliminate the specific asset data? I can sympathize with the owner, but of course the answer is no for obvious reasons. But others in the office have suggested sending a revised SAR as requested, but stating plainly in the accompanying letter to the employer that the original SAR is required to be distributed as is and that is what we recommend doing. Still doesn't make it right, but does it help us (TPA) at all?

I did some checking and I believe you are correct Belgarath. Thanks for showing the way.

2 separate questions here for the price of 1, but both are pretty straightforward. If an employer wants to terminate a target benefit plan and they are not planning on filing with the IRS for a determination letter, what is the timing on the notices to terminate (must distribute notice within 15, 30, 45 days)? Question #2 same as above, except it is a money purchase plan. Thanks

Is there a website or other place that compiles information on retirement plan trends? Specifically, I am looking for information on company's that may have switched from a traditional 401k to a safe harbor, possibly detailed by company size. Thanks

Company adopts a standardized prototype plan in 1995 (calendar year plan). I don't have the opinion letter but I would assume it is a TRA 86 document. Nothing seems to have been done (document-wise) since then, although the admin, 5500s, distributions, seem to have been handled timely and properly. The link below answers many questions in this situation: http://benefitslink.com/boards/index.php?showtopic=26811 I wanted to quantify for the plan sponsor what has been missed with their document. Is saying that GUST amendments, RMD amendment, and involuntary distribution amendment (although still not really late) are needed, catch everything? Secondly, if going through VCP to correct, the user fee is $750 (10 employees). Is there usually other government fees or negotiated settlements that take place in this situation? Thanks for comments

Thank you JanetM. After researching this some more and looking at some old posts, I was arriviving at the same conclusion.

An employer wants to start a safe harbor 401k plan, but also wants to include union (collectively bargained) employees in the plan. For these union people, the employer wants to give them a fixed contribution, but they want it to be something less than the 3% non-elective for all non-union people. Is this allowed in a safe harbor plan and if so, does it affect the 401k test in anyway? Thank you

I believe the thread below relates to and answers my question, but was hoping for confirmation since my situation is a little different. http://benefitslink.com/boards/index.php?showtopic=25657&hl= Briefly, in April, 2005, company X is bought by company Y. X has a 401k and Y has a SIMPLE 401k. Normally, there can be no other retirement plan in place when a SIMPLE exists. But I believe the transition rule that applies to acquisitions allows both X and Y to maintain their separate plans for 2005 and 2006. Is this correct? Also, I think the intention is for X's 401k to be terminated and for the SIMPLE 401k to remain as the only plan. As long as the 401k is term'd before 12/31/06 (calendar year plans), there will not be a problem? Finally, would anything change if this involved a SIMPLE-IRA rather than a SIMPLE-401k? Thank you