Gadgetfreak

I agree that the DOL says to use IRS or SSA Letter Forwarding Services. We can also assume that they won't be that quick to update their guidance now that the IRS service shut down. In the IRS announcement, they said they were shutting it down because "...numerous alternative missing person locator resources, including the Internet, have become available to assist a plan sponsor or plan administrator in locating a missing participant or beneficiary owed a retirement benefit...". So this begs the question: Can a Fiduciary rely on OTHER methods for best case efforts to reasonably locate participants (seeing that the IRS is no longer an option and the SSA is prohibitively expensive)? After all, it is just going to an IRA anyway. It is not like they are taking away money from these participants. Also, I just spoke to a rep at one of the rollover companies who said that they believe the Letter Forwarding services were only to be used for terminating Plans and you could do an IRA rollover for a terminated participant in an ongoing Plan by just sending out a regular (non-certified) letter and waiting 30 days - assuming it wasn't returned. That is a bold approach.

I am sure you can but that gets complicated and cumbersome. Also, $35 for a $1000 balance (for example) is a bit excessive when adding our $100 fee already.

Thank you for all the responses. I just want to clarify. We have never allowed for a terminated participant to roll OUT a loan. The receiving Plan is asking if we can amend our Plan to allow it. We have a "relationship" with both Plans so I don't just want to tell the new Plan a straight out "no". On the other hand, I don't want to amend my Plan just to accommodate on person. So I am trying to figure out if there is any provision that is set in a Plan Doc to allow or disallow this. I would prefer to just tell the new Plan that our Document doesn't allow for that type of amendment but I would prefer to know the truth. I haven't found anything yet. Thanks again.

I agree about the receiving Plan. But are you aware of any provisions that can be made on the original Plan's side? I don't see any options in the Plan Document to allow for this. Then again, I don't see any options that allow for the Plan to RECEIVE either (though I thought I saw those in the past but I can't be sure). Thanks.

A terminating participant has an outstanding loan. He doesn't want it to default, doesn't want to pay it off fully and there is no provision to continue paying after termination. He is rolling over the funds to a different 401k Plan. Is there any provisions available in the original Plan that would allow this to occur? I haven't been able to find anything. Thanks.

We used to give sponsors who wanted to force out terminees with balances (and breaks in service) the following: 1) We can force out anyone under $1,000 without consent as a direct distribution. 2) For those between $1,000 and $5,000 (our Documents are set up with a $5k limit), they need to first send out certified mail. If it comes back as undeliverable, they need to use the IRS service. If they don't hear from anyone after 180 days, they can do an automatic rollover. We helped process with Penchecks. Now that the IRS no longer has their free service and the SSA letter forwarding service is $35 (I think), what do you suppose is the best procedures to offer my clients? Do you think I can simply replace the IRS service with the employee locator service? I thought the DOL specifically mentioned using IRS or SSA. I am not sure you can just replace with another service and still do an automatic rollover. Is there any definitive information on what to do now? Thanks.

We have so many different systems and barely any of them talk to each other. We use a custom designed client management system, a document management system (with workflow), QuickBooks for accounting, Minute7 for time management and a plethora of actual 401k software (Relius, FTW, Blaze, etc) depending on the type of Plan and our services. I did look into Renee Conner's new service, www.pensionpro.com, and was VERY impressed. As I have so much invested in all this other software, it wasn't cost feasible for me at this time. But the system looks good. I think it will be a valuable resource to many TPAs.

Agree about their support. They are one of my favorite companies to work with. But I didn't even need them. I figured out I needed one of the questions answered differently for it to show up. In any event, I am not so impressed with their template and was looking for something more robust. I just purchased the $500 package from http://www.pensionpodcasts.info/. I will let you know how it is when I get it (hopefully today).

You are going to get upset even more when you see what the disclosures look like. I just reviewed Hartford's. They aren't "disclosing" anything. 15 pages of pure rubbish. No 12b-1 fees being disclosed. It seems they are relying on the original regs for this year and aren't even disclosing the wrap fees - only the existence of them. As a recordkeeper, I was hoping these disclosures would level the playing field. I am sad to report that it is just getting everyone upset and not doing much else. Hang in there everyone.

We use FTW! I didn't even know. I can't find it but I will just e-mail their support. Thanks for the heads-up.

We are a TPA for many Plans that have only Self-Directed Brokerage Accounts (SDBA). Almost all are places with one advisor and is like a "retail" account. Q&A 39, which was just added, now says that these investments are not DIAs and therefore do not require the fund expense information in the annual notice. HOWEVER, there is still some other information that must be included (like website, 800 number, etc for making trades, info about SDBAs and other things). Does anyone have a template of what these 404a5 Annual Participant Notices should look like for SDBA-only Plans?

We get a PDF report directly from Relius. But, if you are not a recordkeeper, why aren't you relying on the recordkeeper for the fund expense info? Why do you need to do it yourself?

Same here. We bought the Relius add-on. I believe Newkirk has a solution too.

As promised, I am reporting back from the Relius Summit in FL. I attended an "Ask the ERISA Experts" session today with Robert Richter (president of ASPPA) and Stephen Forbes. They said that the actual regulations state that you just need to give a description of the fees without the actual asset-based percentage. HOWEVER, FAB 2012-02 Q5 says that, if you know the amount (or percentage), you need to supply it. Many providers are relying on the "good faith effort" clause to simply follow the regs and not the FAB (possibly because their systems were already designed before May when the original FAB was issued). But everyone believes that systems need to be updated for next year to actually put in the percentage. On that note, I also confirmed that the NEXT 404a5 annual notice needs to go out no later than 12 months after the first. That means you could do it by 8/31/13 or earlier if you want to incorporate it with other processes in your office. For example, I am considering sending the same exact ones out again in November 2012 when I send out QDIA and SH notices so that all notices can be together. Finally, they confirmed that Plan specs do NOT need to be included in the annual notice. American Funds seems to be adding it to make their notices look "pretty". I hope this helps.

I am at the Relius Summit in FL now and will be attending some sessions on this and see if I can get more information. I think we all agree that you need to include participant-initiated transaction fees and their actual costs (I.e. loan initiation, distribution, etc.). What remains to be clarified is whether you need to give the actual percentage or dollars of asset-based recordkeeping fees and other actual dollar amounts/percentages OR if you just have to explain that the fees exist and explain what they are for. Expertplan did NOT give their asset-based fees on their 404a5 annual notice. It seems to be mixed what the other big firms are doing. And, I am still trying to find out what General Plan Info means for these notices. Is it actual Plan provisions or just generic info about voting rights, etc. I will let you know what I find out.

Austin, you sure you aren't supposed to fill in the amounts on the JH notice?

So now you have me totally confused. JH is giving the specific fees. Others are not. Austin says it is not required. But the ASC Notice seems to say otherwise. My emotions are on a roller coaster. The only good thing about this is the DOL's "best-efforts" comments. Though I hope that is not what everyone else is relying on to do a half-a** job with 404a5.

In "board" talk, people will say you just "hijacked" my post . That's OK. I don't hold a grudge. Your first paragraph seems to say the opposite of what has been stated here. 408b2 gave the actual basis point fees. 404a5 seems to be more generic. As for JH, they seem to be the worst of the bunch, though none are great. IMHO, recordkeepers shouldn't be passing on any work to the sponsors except for distribution of the notices. THEY have the fund info and know all the fees being deducted. And they DEFINITELY shouldn't be suggesting to the Sponsors to contact their TPA for help (since they should do it themselves).

I am an independent recordkeeper using Relius but also a TPA with the big firms. Relius has a module that we licensed which easily spits out the fund information and glossary. We have standard fees for loans, distributions, etc. that are already built into the reports and we were going to add the fees that are not standard across all Plans (i.e. the asset-based fees). If I don't have to do that, I just saved a week of work. But how do you explain the discrepancy with ASC's explanation? As for 3(38), I actually work with a few advisors who have that designation. I am asking because ExpertPlan has a line that either says: The Plan does not have a Designated Investment Manager. Or The Plan's Designated Investment Manager is John Doe. I wonder if this is a requirement. If not, I can go to the beach next week as that will save me another day .

Wow. Thanks for your reply. This certainly makes things much easier if I just tell everyone you may be charged fees of this and that which are for this and that (and not tell them how much). I was concerned because I read in a ASCi Alert from 7/15: "ASCi Insight – Administrative fee disclosures may be expressed in terms of a monetary amount, formula, percentage of assets or a per capita charge. If the fees are know at the time of the disclosure, the explanation must identify the service (e.g., recordkeeping), the cost of the services and the allocation method. If the fees are not known at the time of disclosure, an identification of the services that are expected to be performed and the allocation method ordinarily used is sufficient disclosure. If administrative fees are paid using plan forfeitures or general employer assets, no disclosure is necessary." I understand about the fund information and expenses and I am including that. Final question, do you think you need to list the FA by name? Does it change if the FA is a 3(38) Advisor?

2 questions: 1) Asset-Based Fees - My impression was that we needed to include the asset based percentages for recordkeeping, custodial and advisory services on the ANNUAL notice. I know the actual dollars are reported on quarterly notices. So, if a Plan has a recordkeeping fee of 50 bps and a custodial fee of 10 bps and an advisory fee of 25 bps, this needed to be listed on the annual notice. And, if the fees were based on total plan assets (i.e. recordkeeping fee went down to 40 bps at $1 million of Plan asstets) we needed to add the whole chart. But the sample notices I am seeing from the big providers don't list anything other than an EXPLANATION that there are fees and a DESCRIPTION of what the fees represent. They are not saying the actual percentages or amounts. Does this seem OK? 2) Plan Provisions - American Funds give Plan Provisions including vesting info, etc. Most others are giving the generic info about voting rights, etc. I didn't think we needed to add Plan Provisions to the 404a5 notices. Am I correct? What does everyone think? Thanks!

Oooooh. You caught me . The situation is 100% accurate but I made up the numbers to make it easier to understand. I was using a $100 loan fee just for illustration but GREAT catch! Participant does not want to write a check. Don't ask me why but we offered. In any event, it is still an interesting topic to discuss and, based on what I am reading here, I am comfortable saying that at the time of loan request, the balance is over $2,000 and therefore a $1,000 loan can be processed. If a fee brings the remaining balance to under $1,000, so be it. It would be similar to a loan taken on 12/29 and then quarterly fees hitting the account on 1/1. Or if investment losses cause a drop in account value the day after the loan. Thank you all for your input. I REALLY appreciate it.

That would be discriminatory.

Thanks for the reply. We typically charge the fee to the account but not as part of the loan. So, if someone wanted a $1,000 loan, they would get a check for $1,000 (and need to pay back based on a $1,000 loan) but an additional $100 would be assessed as a fee (not part of the loan). This is based on the Loan Policy from the Accudraft EGTRRA Docs: LOAN AMOUNT ● Maximum Permissible Loan. In general, the maximum amount that can be borrowed is the lesser of 50% of a Participant's Vested Interest or $50,000. If the applicant has any existing loans, the $50,000 amount will be reduced by the excess (if any) of his or her highest outstanding aggregate loan balance during the 1-year period ending the day before this loan is made, over his or her outstanding aggregate loan balance on the day this loan is made. ● Minimum Allowable Loan. Loans that are less than $1,000 will not be granted. PROCESSING AND MAINTENANCE FEES ● Processing Fees. The applicant will be charged a fee of $175 to process each loan application. ● Maintenance Fees. There are no annual maintenance fees on loans. ● Source of Fees. Fees the applicant does not pay directly will be deducted from his or her Account. LOANS MUST BE SECURED Each loan must be secured, including a loan for a residential mortgage (as described below in the section Loan Payments), with an irrevocable pledge and assignment of the applicant's Vested Interest. The applicant can also post any other security or substitute collateral the Administrator finds acceptable. So, do you think I can process the loan now for $1,046 and THEN assess the $100 fee? Or, knowing that there will be a $100 fee immediately which will bring the remaining balanced to less than 50% of the loan fee, means that I should NOT process the loan?

Daily val 401k Plan. Participant has a vested balance of $2,093. Plan's loan policy has a $1,000 minimum loan amount. There is a loan set-up fee of $100. Can loan be processed? If we say that, at the time of loan request, there was over $2k, then the answer would be yes. On the other hand, we KNOW that the loan will trigger a $100 fee which would mean there was less than 50% in the account. I know that subsequent distributions (and losses) have no bearing on the loan amounts. But, in this case, we know right away that the fee will bring down the amount used as security. What does everyone think? I couldn't find anything on these boards or in the EOB. Thanks.