Peter Gulia

Tom Poje and Kevin C, thank you for your great help. Am I right in guessing such an "other attachment" slot lets a user upload any .pdf? Will the document submitted under this "other" slot be included within the Form 5500 report posted on EBSA's public-display website?

A small plan's administrator files Form 5500 (not 5500-SF) and, although it does not engage a CPA to audit the plan's financial statements, prepares financial statements and wants to submit them as a part of the Form 5500 report. How, mechanically, does a filer do this?

BenefitsLink mavens, the third paragraph paterinick's originating query suggests some possibility that the plan might be a governmental plan. "ASRS" might refer to the Arizona State Retirement System. And the "got switched" might refer to Arizona's or another State's change from a defined-benefit pension plan to an Optional Retirement Plan for a State university's faculty and administrative employees. For a governmental plan, it might be true that an employing unit's human-resources person lacks authority. Likewise, it's not uncommon for a governmental plan to contract for an investment custodian or recordkeeper to perform almost all plan-administrator functions.

Thank you, all, for the further information.

MoJo and Flyboyjohn, thank you for the helpful ideas. Flyboyjohn, does it change your analysis if there are a few highly-compensated employees and applying 401(k)'s average-deferral-percentage test would sharply limit the HCEs' contributions? MoJo, does it affect your analysis if the charity is sure it will not grow? All BenefitsLink mavens, how much does choice of service providers matter if the plan is small and lacks purchasing power?

Imagine a 501(c)(3) charitable organization asks for your advice about whether it should establish its retirement plan as a 403(b) plan or a 401(k) plan. Here are some hypothetical facts about this charity: It has about 43 employees, all in one place. There is no highly-compensated employee, and the charity anticipates there never will be one. The highest-paid employee has gross compensation below $100,000. The charity intends to keep her compensation below this mark that calls for reporting details in Form 990. The plan would allow voluntary salary-reduction contributions, and might provide some matching contributions. The charity's governing body believes none of the employees desires any investment beyond mutual fund shares. For this situation, would you suggest a 403(b) plan or a 401(k) plan? Why? Which factors - whether about the different Internal Revenue Code provisions, or about differences in investments and services available - should a smart decision-maker consider?

Thank you both for the good help. From footnote 58 of the Labor department's explanation of the rule: "According to 2013 Form 5500 filings, 12,446 plans had assets of $50 million or more." If one adjusts for the possibility that some employers might have more than one plan (or manage other assets), perhaps a little more than 2% could have an "institutional" fiduciary without using an adviser.

The investment-advice fiduciary rule might allow a counterparty to communicate as a non-fiduciary if, among other conditions, the communication is directed to a plan's fiduciary that manages at least $50 million (and the communicator reasonably believes the fiduciary is capable of evaluating the investment decision). Conversely, if a plan's fiduciary does not manage at least $50 million and is not advised by a registered investment adviser or some other "institutional" fiduciary, a service provider that prefers to be a non-fiduciary must avoid a communication that a reasonable person would perceive as investment advice. What do BenefitsLink people guess as the percentage of 401(k) plans (by number of plans, not assets of plans) that have less than $50 million?

Flyboyjohn, thank you for helping everyone by sharing this information. The letter seems to allow a 90-day grace period without an explanation.

For a governmental plan, the lawyer who regularly advises the plan's fiduciary should be ready to say which State statute governs. Beyond whatever State law might or might not provide, some recordkeepers' service agreements require a minimum notice as a condition to the recordkeeper's obligation to perform its services concerning a change of investment alternatives.

In addition to considering the other suggestions, the plan's administrator might want its lawyer's advice about whether an interpleader (or some other court proceeding) is or is not appropriate. ERISA grants a Federal judge discretion concerning attorneys' fees and costs. If a judge finds there was no real ambiguity that needed the court's decision, the judge might order the administrator that initiated the interpleader to pay or reimburse another party's fees and costs.

luissaha, if your ERISA-governed plan's provision closely follows ERISA section 206(d)(3) and Internal Revenue Code section 414(p), consider that the child-support agency's document not only might fail to meet the definition of a qualified domestic relations order but also might fail to meet the definition of a domestic relations order. Get your lawyer's advice about those points, and about what procedure the plan's administrator might use in responding to the child-support agency.

John Feldt, while I agree with the idea that a TPA should not go along with its client's wrongdoing, how would the Internal Revenue Service make the TPA's employee responsible if the evidence shows she rendered correct advice (and further explained all tax consequences that would result if the client insists on the wrongdoing)?

MoJo, thank you for the helpful information about some of what happens in California. In your experience, does a service provider served with an injunction give the plan's administrator an opportunity to challenge, whether at the employer's or the plan's expense, the restraint on the service provider as ERISA-preempted?

The point about misuse of an ASPPA member's work product is why I put in my hypo that the warnings about the client's wrongdoing are in the report. Circular 230 has a provision that might apply to a "practitioner" even if she is not a preparer. Here's the text: A practitioner who, having been retained by a client with respect to a matter administered by the Internal Revenue Service, knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper which the client submitted or executed under the revenue laws of the United States, must advise the client promptly of the fact of such noncompliance, error, or omission. The practitioner must advise the client of the consequences as provided under the [Internal Revenue] Code and regulations of such noncompliance, error, or omission. So is the report's warning that the plan might be misadministered and tax-disqualified enough? Or must a practitioner say something more? But even if it is something more, doesn't section 10.21 (quoted above) mean that the only person a non-preparer practitioner must communicate to is her client?

Belgarath, what if the observer is an employee of the TPA (and not a shareholder, partner, member, or other owner of the TPA)? The employee tells everything to the TPA's owner, who says the TPA firm won't do anything further. Has the TPA's employee discharged her personal duties under ASPPA's code?

Belgarath, you're right to think about whether the client authorized, whether expressly or by implication, the certified public accountant to reveal confidential client information.

RatherBeGolfing, I put in my variation of the hypo "Assume the TPA is not a . . . preparer of any tax return" because I believe a preparer must disassociate herself from a tax return she believes to be false. But assume the TPA's employee is an ASPPA member. Does the report and warning described in my hypo meet a member's duties under ASPPA's Code of Professional Conduct?

Just so we all learn together, let me ask what BenefitsLink mavens think about a variation on the hypothetical situation: Assume the TPA is not a signer or preparer of any tax return. The TPA performs all requested work using the data set its client furnished. In delivering the TPA's report to its client, the TPA includes written explanations calling out that the owner's daughters' service and compensation information seems doubtful. The TPA explains that the results would be different if the work assumed different amounts. The TPA explains that the plan might be misadministered (and might be tax-disqualified) if a contribution was determined from an amount that is not really compensation for services rendered. The employer/administrator receives the report, confirms that it understands the TPA's advice, and makes no change. The employer and administrator file the plan's Form 5500 report and all tax returns of the employer and business assuming the daughters' false compensation and contribution, and the business's deductions and other tax treatments based on them. By explaining correct information to the TPA's client, has the TPA's employee done what her profession's ethics rules ask of her? Is there something further the TPA's employee must do? Is there something further the TPA's employee should do? What, if anything, must the TPA's employee refrain from doing? For each of these questions, why?

PFranckowiak, if a plan's administrator (or its employee or discretionary agent) is evaluating whether to treat the order as a qualified order, one looks to the plan's definition of a qualified domestic relation order. If the plan follows ERISA section 206(d)(3), the plan likely provides that an order is not a QDRO unless, among other conditions, the order "clearly specifies" the amount to be paid to each alternate payee. That your originating post describes two possible readings (without considering that yet more interpretations are possible) suggests that the order does not "clearly specify". If the plan's administrator already decided that the order is a QDRO to be followed, a non-discretionary service provider asked to implement a division might seek protective instructions (and indemnity) from the plan's administrator.

What do BenefitsLink mavens think about these potential corrections: The defined-benefit plan or the employer pays the profit-sharing plan the amounts it advanced. The breaching fiduciary or the employer pays the profit-sharing fair interest on those amounts. The breaching fiduciary or the employer pays fees of professionals and other expenses incurred because of the error and correcting it. jkharvey, if by today or tomorrow the profit-sharing plan has not collected all correction amounts, will the administrator allocate the correction receivable among participants' accounts?

I concur with Flyboyjohn; an employer/administrator should not be responsible for a breach of its fiduciary duty to administer the plan according to its document and ERISA unless the employer/administrator knew the participant intended not to repay.

To determine whether something is a participant loan that might meet conditions for ERISA's statutory prohibited-transaction exemption: "The existence of a participant loan or participant loan program will be determined upon consideration of all relevant facts and circumstances. Thus, for example, the mere presence of a loan document appearing to satisfy the requirements of section 408(b)(1) will not be dispositive of whether a participant loan exists where the subsequent administration of the loan indicates that the parties to the loan agreement did not intend the loan to be repaid." http://www.ecfr.gov/cgi-bin/text-idx?SID=e3a3147a70d22f29bb42e4675a67fe47&mc=true&node=se29.9.2550_1408b_61&rgn=div8

Along with reading the plan's provisions and carefully interpreting the provisions if any is ambiguous, an employer/administrator might consider that fixing the date of when a deemed employee's deemed employment ended might be less obvious than it is for a common-law employee. http://www.ecfr.gov/cgi-bin/text-idx?SID=de2a11e42d5517340084ea34d12a1004&mc=true&node=se26.6.1_1401_610&rgn=div8

As this conversation shows, the ERISA rule's application can be less than clear, and can be burdened by practical difficulties.