RatherBeGolfing

Same here. My current pre-approved document allows for loan source restrictions, as did my my prior pre-approved document. Both from big vendors that many of the folks on these boards use everyday.

Congrats!

I think we can all guess who it is based on the details above So my previous answer shall henceforth be read as "what that guy said".

Unless the auditor is requesting a "fix", my argument would be to let it stay the way it is. The reasoning being that Prime is not an unreasonable rate, even if the plan normally uses Prime +1. It would be different if there could be a presumption that the rate is unreasonable, like 15% or 1%.

I only do a handful of them, and the ones I do are as favors to a client or contact. There is so little work required on the vast majority of them that I will happily pass on a client who complains about a fee for 30 mins of work. Completing the EZ and sending instructions to the client takes about the same amount of time it takes to explain to the client that they don't have to file because of XYZ. I make it known that if they want me to do the work, they will also file the EZ.

Is it really riskless though? see my questions above on default? There has to be more than a 0% chance that As account balance will not be able to cover the loan obligation in the event of a default. Even if A's distributions (in service, since termination would trigger an offset) are limited to amounts that exceed the loan obligation, investment losses to the loan's security are still risk, no?

I'll take a stab at this since I know Larry will correct me if I'm mistaken ? In a self directed plan, A has $50k mutual funds and a $50k note In a trustee directed plan with loans treated as a segregated investment, A has $50k mutual funds and a $50k note In a trustee directed plan with loans treated as an investment of the trust, A and B both have $100,000 account balances, sharing 50/50 in the investment earnings, which is now $150k mutual funds and a $50k note. In 1-3 above, the loan is secured by the A's account balance (assuming that the plan does not require additional security). Here is where I struggle with 3: - If A defaults without a distributable event, does the loan stay on the books until A has a distributable event? Or does it offset without a distributable event? - If A does not have enough left in his/her account balance to cover the loan in the event of a default, what happens? Lets say that distributions and significant investment losses have left A's account balance $10k short of his/her loan obligation at default.

To clarify, if the participant who defaults on the loan payments does not have a distributable event at the time of default, what happens?

So 5 days this year because that is what the client told them, but next year its 2 days? Nope, not good enough for me... If you are gonna use 5 days in your audited financials you need a better explanation than the client told me so...

And would most likely be deleted by a Mod...

Yes Im not sure I see it that way. The fees usually can and should be estimated. Under 408b-2, I don't think it is enough to say "we get revenue sharing from many large record keepers". I believe you need to specify where it is coming from and how much you estimate that you will collect (or the formula if an amount cannot be estimated). I'm a bit rusty on 408b-2 though. With that information, the fiduciary knows what the service agreement calls for and what the TPA expects in revenue sharing. This is also a good argument against evergreen service agreements. Sometimes easier said than done. Id rather not deal with revenue sharing at allk to be honest. On some plans, we have negotiated with the fund company to have them discount their fee by the revenue sharing amount, and have the employer pay the fee. Less fees for the plan and the employer can deduct the expense. You need a plan with a lot of assets in order to get the big guys to do anything but standard procedure though.

Are you sure you are not confusing this with the class exemption? You can only use the class exemption on one transaction every three years.

Rev Rul 2019-19

Not sure I would want to segregate pooled assets without an actual distribution request, and at that point I don't think it would be necessary.

Its been a while since I dug into the specifics, but... I believe you have to be more precise than just referring to "document X". It should refer to a page or a section in the cross referenced document so that the recipient can easily access the required information We generally use one document.

Yes.

I guess I'm too soft nowadays, I draw the line at tarred and feathered

Belgarath, I agree. I don't even think a service agreement has to state that TPA will keep excess revenue sharing, unless the revenue sharing is being payed to the TPA for the stated purpose of paying for fees. In my situation, the plan has actually paid less than it had originally contracted for since the TPA has reduced its fees by revenue received from the investment company.

Quick example: Plan A contracts with investment company X to pay 50 bps in fees. A also contracts with TPA Y to pay $4,000 in annual fees. Investment Company X pays all TPAs with at least $100,000,000 in combined plan assets a 5bps incentive. Plan A has $10,000,000 in assets, and the fee collected by X is $50,000. Y has more than $100,000,000 in total plan assets with X, so it receives an incentive of 5 bps from X. Under this scenario, must Y pay the plan $1,000 since it received $5,000 from X and its agreement with A was $4,000?

I'm not a big fan of revenue sharing, but I'm struggling with the requirement part. I don't think I have seen many revenue sharing or incentive programs from a third party that even mention fees or expenses.

Are you saying that unless specifically stated otherwise, revenue sharing MUST be credited towards fees, and when all fees have been paid, excess MUST be paid to plan?

Luke, are you saying the revenue sharing is a plan asset simply because it originated from investments held as a plan asset? For this argument, do we need to get more specific as to what we mean by "revenue sharing"? For example, many providers have "TPA incentive programs". All (or qualifying TPAs) receive an incentive from the provider based on the assets of the plans in the TPAs book of business. Lets just make it easy and say 5 bps. The provider collects 50 bps from the plan as its asset based fee. The provider pays 5 bps to the TPA, which is properly reported. Because of plan assets, the 5 bps paid to the TPA amounts to more than the total fees for the year per the service agreement. Would you call the excess a plan asset in this situation? Is it different if the provider's incentive program is based on the specific investments (5bps on assets in class A, 7 bps on assets in class B, etc.)

I see no harm in naming the company since they have openly communicated this. I don't have all the details, but there is more to it than just sending the funds to an IRA. I have also not seen the follow up that OP refernce, only the initial communication to TPAs and Plan Sponsors. Voya Financial is working with Millenium Trust on uncashed checks that have been outstanding for more than 365 days. The letter to the plan sponsors first reference checks that are returned as undeliverable, but then the terminology switches to uncashed checks. Either way, Voya's default method of dealing with these checks is to transfer them to MT. MT will then place them in an IRA and attempt to contact the "account holder" with instructions on how to receive payment from MT. The plan sponsor can tell Voya to not transfer to MT and make another attempt to an updated address, or deposit the funds to the plan's forfeiture account. MT is not the only provider to offer an uncashed check solution, Penchecks has a similar solution using either Taxable Savings Account or a default IRA. Im sure there are other players as well.

Do CPC first. The modules are not very comprehensive, but overall that designation takes more time anyway, so if you are going for both you are better off starting the one that will take the longest. The modules are pretty brief and are designed more as an introduction rather than a deep dive.