SRP

I am taking a side-trip to the 1st reply by Mr. Poje. My company is considering options in relation to how to make the 5500 filing process more manageable in future years. We are the recordkeeper/tpa on about 3,500 small to medium sized plans so the issue is related to the proper handling of a hiqh quantity of filings. My understanding is that the 5500 is a filing "... on the trust ..." and not actually a filing on the plan itself. As recordkeeper (participant directed 401(k) plans - all filing Form 5500-SF) we essentially control of (or are at least the gatekeeper of) 100% of trust processing. In relation to the actual signing of the Form 5500 - I believe it is a requirement of the "Plan Administrator" of the plan to sign and essentially that seems to be a fiduciary function in which the signer is certifying to the completeness and accuracy of the information on the filing. (I can't believe that I am saying this ... but please remember I am pursuing options) ... I am becoming less concerned about actually signing the Form 5500 as the plan administrator. This is not signing on behalf of the plan sponsor or signing as the tpa with the image of the ER's actual signature attached to the filing. Rather - what if I actually signed using my credentials as manager of my tpa firm. What problems do you see this raising? My thoughts: 1 - I am confident in the accuracy and completeness of the filing (since as recordkeeper I processed 100% of the activity within the trust); 2 - I am concerned about whether I have all of the information to accurately express timely deposits of EE contributions (but based upon the contributions processed - I can determine if the contributions are timely or late); 3 - I routinely ask my clients to confirm information such as EE data, fidelity bonding, ... so I believe I have accurate information regarding those items on the filing; 4 - I believe that the fiduciary liability is NOT an "all or nothing" concept and that, as a signer, I have fiduciary liability to the completeness and accuracy of the information on the Form 5500 filing - BUT I am not a named fiduciary nor am I a fiduciary over all other functions related to the plan; 5 - the instructions for the Form 5500-SF indicate that the filing must be signed by the "plan administrator" (no capitalization in the instructions but implied to be the named fiduciary plan administrator) - so if I sign the Form 5500 am I indicating that (in constrast to #4 above) I am the named fiduciary "Plan Administrator"? What experiences do you have or have heard of where the tpa signed the Form 5500. In general, what problems and liabilities would this actually create? I am wondering if there is a way to contain any fiduciary liability to solely be the information reported on the Form 5500? Any thoughts would be appreciated. Thank you.

I am interested in information regarding restrictions around paperless enrollment within a 401(k) plan. My question is related to obtaining electronic signatures via Web or IVR systems. I have always believed that the enrollment form is an agreement (e.g. a contract) between the Employer and the Employee to withhold a portion of the compensation and deposit the contribution into the plan trust. Therefore, obtaining an electronic signature via the ESIGN act will suffice in relation to official execution of this agreement. However, I am being told that there are 15 states in which such an electronically signed agreement is invalid because those states do not recognize or allow electronic signature for agreements. Is it true that a participant's paperless enrollment into a 401(k) plan is invalid in some states? Thank you in advance for your comments.

Has anyone heard of a "Foreign Miscellaneous Government Entity"? I have a prospective client claiming this as their organization type and state they have an Federal EIN. Can an entity of this type sponsor a qualified plan? Thanks in advance.

What about a different situation where it wasn't a restoration as a result of liquidating a specific asset but rather a loss because of a recordkeeper's mistake. For instance, what if the recordkeeper was obligated to liquidate plan assets (on a predefined date) to transfer the plan to a new recordkeeper but made a mistake and liquidated on day later. Let's say because of a market value decrease the total plan assets value is $50,000 less than it would have been if the liquidation had been completed on the proper date. Is a payment by the recordkeeper a permitted restorative payment due to a trustee breach OR what is the appropriate method to recognize this $50,000 adjustment/corrective deposit and allocation to the participant accounts?

I am looking for suggestions on the appropriate handling of a somewhat hypothetical situation. What if an employer processed an electronic funds transfer (e.g. ACH) for contribution purposes and the recordkeeper immediately invested the contribution (per its normal procedures) as instructed by the employer. However, two days later it turns out there was insufficient funds to cover the ACH and the custodian demands reimbursement. In the meantime the recordkeeper sells the exact shares that were purchased by the insufficient funds "Buys" but because the market has dropped the proceeds are less than the value of the initial purchases. Let's say the Service Agreement(s) are silent about such an event. Is there an implied right of the recordkeeper or the custodian to liquidate additional plan assets in order to reimburse the shortfall on behalf of the custodian? What options are generally available to the recordkeeper or custodian to collect the shortfall? Thanks in advance.

I am interested in hearing from recordkeepers (or others with knowledge from a recordkeeper's perspective) who as part of their service offering include one or more money market investments within a plan's fund line-up. Does anyone have any insight into the situation where a recordkeeper selects for (or requires) the plan to utilize a specific money market fund due to custodial relationships and basic plan recordkeeping/operations? I am interested to know if a recordkeeper that essentially selects that investment for the plan comes under scrutiny as an investment manager through the SEC or any other regulatory body. The recordkeeper is in a situation where it needs to have an available money market for its daily operations (default investments, forfeitures, ...) and it selects one of the money markets that the custodian makes available through the custodian's platform BUT does not want any investment liability or to be viewed as managing that asset for the plan. Also, I am interested if anyone has insight into trying to provide a money market investment (within a participant directed plan) that has FDIC insurance coverage. What options have you found in having that type of FDIC insured investment on the plan fund lineup. Lastly, it appears that the large operations tend to have a captive Money Market group that manages a money market account AND the product platform utilizes that investment as the plan's money market investment. Does anyone have knowledge from the perspective of a recordkeeper who may try to mimic such a "large house" investment by combining various money market investments to come up with a blended money market investment. Is there any prohibition against a recordkeeper creating/maintaining such a blended money market investment OR in other words must such a blending of investments be done under the umbrella of a trust company or a Registered Investment Advisor (RIA)? Any thoughts regarding this tricky issue are appreciated.

I am soon starting a 5500 clean-up project would like to receive suggestions on an approach from anyone who may have experience with a similar problem. A plan was a Profit Sharing plan through 2005. The employer then set-up a new 401(k) plan for 2006. The 401(k) has assumedly been administered correctly (albeit independently) since 2006 including filing of Form 5500 but only on the 401(k) plan assets. No further administration (including 5500 filing) has been completed on the original Profit Sharing Plan. Is it advisable to treat this as an amendment of the PS plan at the time of the establishment of the 401(k) plan and then deal with this in terms of a need to file amended form 5500's that would now include the assets of the PS plan. If this is not advisable then is it true that the proper approach is to utilize the Delinquent Filer program for the PS plan 5500's? Any help is appreciated. Thank you very much.

I am with an on-line TPA and we are reviewing our security policies and practises. I am interested in identifying a source of information that provides industry standards or best practices regarding things such as: how to best keep personal private information (SSN's, ...) private, what types of standard account verification practices are used for call center personnel to identify/verify callers, ... I appreciate any assistance you can provide.

I have a request to "re-register" the shares of a participant's account into accounts in the name of a self-settled (or grantor) trust. My thoughts are this cannot be done but I want to be clear with the Participant as to why and what are the alternatives. 1 - The participant is not the owner of the shares held in his account because since the Qualified Plan assets are held in trust the Trustee of the Plan owns the shares and not the participant. The participant has no rights to re-register or re-title while held within the Plan trust. 2 - The participant can name the trust as the beneficiary for the account (so long as J&S rules either don't apply or are satisfied). I am fairly certain regarding #1 - but I don't know enough regarding #2 to indicate what is the effective difference between having the shares held within the living trust (as requested) and having the trust simply be the beneficiary of the participant's account. What would be the different treatment, if any, since it is a self-settled (grantor) trust whereby the settlor/grantor and trustee is one in the same and essentially has control of the assets until death anyway. Thanks in advance.

Can anyone point me to a source (or share your own examples) which provides guidance on reasonable formula's used to calculate an individual participan't investment rate of return that can be communicated via a participant account statement? I am assuming that any reasonable method can be used to determine this individual rate of return on an accoun statement. I would expect that it is prudent to describe (on the statement) to a certain detail the formula/manner used to arrive at the rate. Although I have used various methods of calculating rate of return for other purposes, I have never actually communicated this to a participant such as providing it through an account statement generated by a recordkeeper. Any help would be appreciated. Thanks

I am with a small TPA in Colorado and we reserve the right to charge SPECIAL service fees for services that fall outside of our standard service agreement. These special services include things such as fixing payroll problems based upon incorrect data, calculations of lost earnings on late contributions and various other types of special services. These services are charged on an hourly rate due to the nature of the variability/complexity of the project or service. We currently charge $100.00 per hour to the client for these services and we have been using this rate for almost 10 years. I am interested in obtaining feedback as to whether this fee is out of date compared to the marketplace. Thanks in advanace for your responses.

I am with a recordkeeper who uses a proprietary recordkeeping system. We had anticipated that we would be required to develop an enhancement to our system to handle tracking of short-term trading ("round trips"), warning of participants approaching the fund's policy and ultimately temporarily blocking the participant from future trades if the policy has been violated. However, the way that things seem to be panning out is that perhaps the fund company's are really retaining responsibility for such tracking/analysis. The reason I say this is because our custodian (for our omnibus accounts) requires us to respond with summary and detail transaction data only upon request from a fund company. It is not clear to me if they will also expect us to have already blocked someone from a trade or if they will only ask us to block the participant from further trades for a period of time. Fortunately, we have not had any requests to date. Secondly, the prospectuses for many of the funds that I have checked indicate that in the case of an omnibus account there isn't a specific indication that the recordkeeper is obligated to track/warn/block as needed. One prospectus of a fund (that has an obnoxious short-term trading policy) indicated that the recordkeeper is expected to follow the policy "or some other reasonable alternative". Our situation is that the custodian is the "intermediary" as far as is goes with the agreement with the fund company. In our situation if we do not respond within 4 days of the fund company's request for data then futher trading (as the recordkeeper remitting trades) in that specific fund may be halted by the fund company (except that we may be granted a short extension if necessary). I am looking for feedback from other recordkeeper's as to how they are handling the SEC Rule 22©2 short-term trading requirements: 1 - Does your recordkeeping software fully handle the rules set per each fund company? 2 - Are you using the SPARK recommendation (or some other reasonable and consistent policy) regardless of the specifics of any given fund company's policy? 3 - Are you only responding upon the custodian's requirement to provide data per fund company requests? Thanks in advance for your input.

I have recently dealt with a situation where the an employee embezzled funds from the employer. This embezzlement did not have anything to do with the Employer's retirement plan (fortunately). The employer sued and received an out-of-court settlement issued by the court. As part of the settlement - the participant assigned the rights to the 401(k) plan balance over to the employer. This is permitted as long as a few conditions are satisfied (e.g. voluntary assignment, writing that indicates the EE had a right to change her mind, ...). Generally, ERISA prohibits any assignment but there is at least this one exception. Your client may want to pursue a legal remedy against the EE unless they already have done so and then consider the method described above as a possible settlement (in part or in whole).

What are your thoughts on the following scenario: 1 - A Money Purchase and a Profit Sharing Plan merged but kept the sources of money separate; 2 - the new plan did not continue with ongoing money purchase contributions (only Profit Sharing); 3 - company now wants to split the plan to separate out the old money purchase plan assets; Can the existing PS plan be split in a manner where the MPPP assets are separated out into a PS plan of its own? The purpose is the client wants to eliminate the MPPP assets (i.e. avoid J&S requirements on that money type) by ultimate termination of a PS plan that only holds the MPPP assets subject to J&S.

I am not aware of the FDIC account option. However, Penchecks has a seeminingly promising solution to missing participant accounts and missing distributee accounts. They will setup a missing participant IRA for participants who cannot be located. They will also setup a Missing Distributee account for participants who have an outstanding lump-sum check that has had taxes withheld (and therefore should not go to an IRA) but that the participant has not yet cashed the check (you would have to stop pay the outstanding check as part of the process). We are checking them out to solve some of our recordkeeping problems and it seems like an efficient method to get these types of problem accounts out the Employer and TPA's hands. They also sponsor www.unclaimedretirementbenefits.com which appears to be supported/sanctioned by the DOL also. Call Spiro at 800-541-3938 x 13 and tell him Steve at ePlan Services, Inc. sent you.