E as in ERISA

If you don't resolve by 10/15, I would still file on 10/15 -- without an audit and with no box checked -- assuming audit report not issued.

I'm guessing that they are less likely to budge on a financial issue. Do you have an argument that the money wasn't plan assets for the applicable year? Hasn't the DOL informally indicated that they are plan assets once you know how much belongs to the plan (implying it is not before that date). And/or you have up to a year to deposit. I.e., do you have an argument that the amounts don't hit the 2002 or 2003 financials?

That would not be good. What is the topic? Is it worth a DOL audit?

For aggravation? No. For the cost of services that the employer can specifically quantify? Possibly. See Labor Regulation 2550.408b-2. But I think that exemption is rarely used, except in the case of multiemployer plans.

I think that status as an ERISA plan is a big deal right now for some -- after the recent Supreme Court case confirming that ERISA preemption exists in cases involving HMO decisions on whether to pay claims -- and it affects whether to file in state or federal court.

I'm not sure but if I recall correctly, the beginning numbers might be "unaudited"?

http://www.aspa.org/archivepages/conferenc...ines/irsqna.htm for 2002

Ashley L: The problem with the new rules is that they may actually promote inertia. From purely a fee standpoint, a participant may feel that he is as good/better off with a safe harbor IRA (where the fees can't be higher than ANY comparable IRAs, I believe) than doing his own rollover. He might not be considering the benefit of actively managing the IRA assets, etc. But eventually he is very likely to be separated from the IRA (the financial institution is merged, the participant moves, etc.) He won't even know what state's escheat rolls to look at. He will lose the entire 1000 to 5000. If you eliminate the 1000 to 5000 cashouts, then you encourage action as opposed to inertia. The fee benefit goes away. Based on the recent guidance from DOL (summer 2003) and IRS (early 2004), terminated participants can be charged for their share of plan expenses. That charge would likely be higher than the safe harbor IRA (no dollar limits on the plan fee provided it is reasonable, etc.) The participant will be motivated to take ownership of his account and to consider both the fees and the investments. And where appropriate, he will presumably roll to an IRA with a financial institution in his state and provide the necessary signatures, etc. It is less likely to get lost. He'll end up with the retirement funds.

Do you ask all applicants for a credit history and/or have their credit checked? If the policy says creditworthiness is a consideration in making the loan, then I think that means it would be a basis for denial if the credit is bad. But I think that you would need to make sure that you apply the same process to everyone.

And that is why EGTRRA's auto rollover rules are so ridiculous. Ultimately the money is all going to be escheated. And with financial institutions merging, companies being in multiple locations, and people changing jobs and moving, the money is going to be escheated to states where the participants have never lived. They'll never find it. I agree the best answer is eliminate cashouts and charge term'ds fees for their accounts.

ljr, the DOL guidance you were seeking? New Field Assistance Bulletin says that 100% withholding violates ERISA: 100% Income Tax Withholding - We are aware that some plan fiduciaries believe that imposing 100% income tax withholding on missing participant benefits, in effect transferring the benefits to the IRS, is an acceptable means by which to deal with the benefits of missing participants. After reviewing this option with the staff of the Internal Revenue Service, we have concluded that the use of this option would not be in the interest of participants and beneficiaries and, therefore, would violate ERISA’s fiduciary requirements. Based on discussions with the IRS staff and our understanding of the IRS’s current data processing, the 100% withholding distribution option would not necessarily result in the withheld amounts being matched or applied to the missing participants’/taxpayers’ income tax liabilities resulting in a refund of the amount in excess of such tax liabilities. This option, therefore, should not be used by plan fiduciaries as a means to distribute benefits to plan participants and beneficiaries. http://www.dol.gov/ebsa/regs/fab_2004-2.html

New field asistance bulletin on missing participants and terminated DC plans: http://www.dol.gov/ebsa/regs/fab_2004-2.html

Never required. But if they want to review internal controls of plans you administer and you don't have a SAS 70, then they may want to come in and do tests in your shop. Note that the SAS 70 requirements have not changed dramatically, if at all, for benefit plans. The new Sarbanes Oxley 404 requirements do not apply to SEC filings for benefit plans. However there are a lot more nuisance inquiries because they are doing a lot more review of internal controls for corporate work and they are mass mailing SAS 70 requests to all vendors of the company. For basic info on SAS 70 see http://www.sas70.com/about.htm http://www.sas70solutions.com/SAS70-FAQ.html http://www.sas-70.com/

There has sometimes been speculation that no plan meets all the requirements of ERISA 404© and a fiduciary may be better protected from liability by performing due diligence and helping improve participants understanding of investments. Does anyone think that the same is true of the automatic rollover rules? In other words, is it likely that there will be some question of whether a plan has complied with the safe harbor based on lack of definition in the rules (or will the new requirement for an agreement eliminate that risk)? Would it be just as good to comply with the one-year non-safe harbor rule instead.

I think I've seen both negative assets and liabilities -- but awhile ago -- not current format.

There seem to be problems with the pdf version of the safe harbor? Here is the html version: http://a257.g.akamaitech.net/7/257/2422/06...04/04-21591.htm

Speaking of EGTRRA 657.... http://www.dol.gov/ebsa/newsroom/pr092704.html

Without that rule, it may be impossible for plan administrators to comply with the rollover requirement. Cashouts would have to be removed from plans.

The cited FAQs at http://www.occ.treas.gov/10.pdf are intended to provide guidance relating to Section 326. They indicate that there is no "customer" to whom the signature requirement applies until the individual contacts the bank. 4. The CIP rule requires a bank to verify the identity of each “customer.” Under the CIP rule, a “customer” generally is defined as “a person that opens a new account.” If a pension plan administrator chooses to remove a former employee from the plan pursuant to section 657© of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), it is required by law to transfer these funds to a financial institution. In addition, an administrator of a terminated plan may remove former employees that it is unable to locate, by transferring their benefits to a financial institution. Would a plan administrator or the former employee be a bank “customer” where funds are transferred to a bank and an account established in the name of the former employee, in either of these situations? In either situation, the administrator has no ownership interest in or other right to the funds, and therefore, is not the bank’s “customer.” Nor would we view the administrator as acting as the customer’s agent when the administrator transfers the funds of former employees in these situations. A customer relationship arises and the requirements of the rule are implicated when the former employee “opens” an account. While the former employee has a legally enforceable right to the funds that are transferred to the bank, the employee has not exercised that right until he or she contacts the bank to assert an ownership interest. Thus, in light of the requirements imposed on the plan administrator under EGTRRA, as well as the requirements in connection with plan terminations, the former employee will not be deemed to have “opened a new account” for purposes of the CIP rule until he or she contacts the bank to assert an ownership interest over the funds, at which time a bank will be required to implement its CIP with respect to the former employee. This interpretation applies only to (1) transfers of funds as required under section 657© of EGTRRA, and (2) transfers to banks by administrators of terminated plans in the name of participants that they have been unable to locate, or who have been notified of termination but have not responded, and should not be construed to apply to any other transfer of funds that may constitute opening an account.

Bottom line: If you don't keep track of sources, then you have to apply the most conservative rules to the money. If you want more options now -- or in the future! -- you need to keep track.

Does the J&S apply upon termination for amounts less than $5,000? It doesn't otherwise.

Is this answered by question 4 relating to definition of customer at http://www.occ.treas.gov/10.pdf ?

I agree that you need to have the provision very carefully and get proper plan interpretation. It could be a difference between amount and source of dollars for the distribution. E.g. if PSP is $10,000 and match is $5,000. QDRO may be asking for half of $15,000, or $7,500. It could be that the entire $7,500 has to be taken out of PSP account based on liquidity, etc.

Some would argue that advice provides more protection than compliance with 404© (if there is such a thing)....If investment performance is good, then one's risk of a lawsuit is minimized.

Why isn't the answer the greater of "1 or 2." I'm not familiar with how this section works in transfers. Isn't (B) giving you "the greater of" the period that would be credited under the elapsed time method during the transfer period or the service that would be taken into account under the hours method during that same period? Isn't that what it mean when it says "the service taken into account under the computation periods method as of the date of transfer"? It's telling you to use the calcuation method that had been used up until the date of transfer -- and that would be hours? I agree that under elapsed time you'd only get one year (2003). However, under the hours method, you'd generally get credit for both 2003 and 2004 assuming that you had 1000 hours in each (which a FTE would generally have by September).