Pam Shoup

Are you talking about a list of funds that everyone seems to have in the brokerage window, or just a random fund that a small percentage of participants have?

Yes. Our notification tells the participants that fees may be paid by the plan sponsor, the plan or the participant, if there is any chance that the participant may be paying all or part of any fee. Then we do our best to be as specific as possible. Some fees are a lot easier to quantify than others.

Since the annual 404a-5 notice needs to describe the fees that could potentially be charged to the participant's assets, you should err on the side of disclosing the possible fee. If possible, you can indicate on the notice that the fee may be paid by the plan sponsor and/or the participant. As to the comments of RBG and Bird above, they are correct. We use software from an outside provider and the default language is pretty vague and you really need to work with it to get in more details.

I have not heard of it. However, does the plan document have any language that says that in-service distributions can't be taken from after tax money? That may be what the vendor is looking at.

$50,000, minus the highest outstanding loan balance of $32,670 is $17,330. It doesn't matter if you pay off either or both loans, you still have to do the highest balance calculation. For Example, if you took a $50,000 loan six months ago and paid it off last month, you would have zero available for a loan today since you had $50,000 as your highest outstanding balance during the last 12 months.

Another question to ask is what is in the plan document. Our documents generally limit hardship withdrawals to one per plan year so we have never had this issue.

Don't forget that the IRS does webcasts during the year that could give you ERPA credit. They did did one last year on Circlular 230 that qualified for an ERPA ethics credit. For ASPPA, we tried out their one day virtual conference last fall which gave us credits, without having all of the travel costs involved. I highly recommend that conference. Check out your local ASPPA chapter too as they have one day or part of a day conferences that are local to go to.

What a recordkeeping nightmare! If the money has been deposited to participant accounts and a vested terminated participant is paid out, how do you get the money back? Or worse yet, what if a HCE was able to take out the match due to some distributable event?

A new practice seems to be to send direct wires to the new custodian, which is very frustrating. We get a wire that shows up in the plan with very little identifying information. This can sometimes take us hours of work to track down the participant and the source of the money (plan, IRA, etc.) If the check gets mailed to the recordkeeper (as per the instructions listed on our incoming rollover instructions), we can do all of the legwork prior to the check ever hitting the plan. We have had to send back things like cashiers checks drawn on participant bank accounts (that are just "extra" deposits to the plan) and checks received for people that are not eligible for the plan and the plan does not permit rollovers prior to eligibility, etc.

Some of the cut off times are also established by the types of investments in the plan and the practices of the NSCC trader. For example, our main NSCC trader requires that they have the trades submitted to them by 3:30 each day for ETFs as they trade in real time so we have an earlier cut off time. Since the files process overnight for same day late day trading for mutual funds,, we have to certify to the various NSCC traders that we did not accept any mutual fund trades after 4:00pm, which is why you should not see later cut off times.

I guess that we can agree to disagree. In your example above, we always have the discretion to approve the hardships so the employer would never have been involved. 100% of our clients engage us for PA functions so all of our services are provided knowing that fiduciary responsibility and liability. I sure don't miss the pre-internet days where it was a lot harder to communicate with others in our industry!

So how are you NOT a fiduciary?

. . . . . unless we don't charge any more for 3(16) services than those providers who don't offer those service . . . .

We don't even need the inital authorization from the employer. Let me give you a scenario . . . an employee terminates and the employer enters the term date into their payroll provider's system. The employer is then done as far as the retirement plan goes. We go into the payroll provider's system, pull down the census data, notate the terminee, send the distribution paperwork to the terminee and process the distribution. For a loan, an employee submits the loan request, we do the paperwork, we push to the payroll provider to start the loan deduction, we track the payments and then re-push to the payroll provider the final payroll deduction amount. No employer involvement. (Under current law), we track the hardship suspension dates and report to the payroll provider when to stop and when to start back up to again. For enrollments, we pull the census data, determine new eligibles and send out the enrollment materials. We issue all SOX notices, create the 404a-5 notices annually, issue the safe habor and auto enroll notices, etc. We maintain copies of plan documents, issue the SPDs, etc. The employees log onto our website/vru and call into our call center to initiate transactions and to ask questions. The employer is instructed that if employees come to them with questions, to re-direct them to us. Basically, the employer needs to do almost nothing to maintain the plan. We can push and pull all of the data from their payroll providers (and we have 180 and 360 integration with many different ones), and their independent reps conduct the enrollments.

We do a lot of contract work with the DOL in the abandoned plans program, or where they filed lawsuits and obtained a judgment to remove the trustees from the plan. Most of these are very small plans that other than a quick press release, you don't hear much about. In our experience, the DOL is NOT going after plans for bad investments. However, they are going after plans for operational violations. With that being said, there is a market for REAL 3(16) services where the provider is an actual named Plan Administrator in the document and takes on the fiduciary liability and responsibility for the running of the plan. As a firm that made the move to PA services, I can tell you that it is more cost effective for us to process everything correctly, in real time, than it is to go back after the year has ended and try to fix mistakes caused by an employer approving a transaction that was contrary to a plan document. We also don't have to wait around for employer signatures and take 5 phone calls from an impatient participant who wants their money.

I guess that I can toot my own horn . . . . AMI Benefit Plan Administrators, Inc. www.amibenefit.com. 70% women owned and 2/3 of the board is women. We do work in the 403(b) arena.

1. Essentially Yes 2. Yes I will speak to a DC plan only. There are a lot of ways that an employer can offer a retirement plan when a PEO is present and with limited information, I can't answer the question specifically. However, the PEO could sponsor a plan and then each "child" company could sign onto the plan, usually with a joinder agreement, specifying its own provisions. It is still possible for the "child" company to sponsor its own plan, but that comes with its own issues. If the leasing company has its own plan, the "child" company should contact the service provider for that plan for more information.

The simple answer is yes. However, to address both MoJo and Larry . . . we often receive executed DROs that contain language that is contrary to the plan (or law) provisions, usually when you have an attorney draft an order who has very little experience in ERISA. We have seen language that says that the participant is going to pay all of the taxes for the alternate, or that the alternate will be required to pay a penalty tax, to asking for more money than the participant has or limiting the alternate to only a cash distribution, to demanding that the participant has to countersign any paperwork that the alternate submits . . . . In those cases, we (as the Plan Administrator) are forced to disqualify the order and ask for provisions to be corrected. However, once the asset split has been done, and in the case of a DC plan, the alternate has been paid out, you can't undo that payout. Another QDRO can be issued to force an additional payout, but not reverse the first payout. To Quote QDROphile:

This may be a little off topic, but has anyone else had a restraining order issued against them specifying that no distributions are to be made to the participant until the QDRO has been processed? We are starting to see these restaining orders in messy divorce cases.

What does the Fiduciary Plan Administrator want you to do? A QDRO alternate would also qualify as a participant/beneficiary under the plan so there is a fiduciary duty to the alternate too. What happens if the QDRO requires that 100% of the proceeds be paid to the alternate and you paid out the hardship to the particpant? Also, is the participant trying to get money out the plan to avoid paying it to her spouse? Is there a property settlement agreement or divorce order that specifies what the alternate will be getting? If so, then you know for sure that the Plan Administator will have a fiduciary duty to the alternate too.

I am siding with the plan on this one. You were notified at least 30 days before the blackout by phone and by mail by your broker that you needed to move the money. Since blackout notices are such an integral part of the conversion process these days, I would also have to believe that a notice was mailed to you in November from the employer. The broker told you that the money was being moved by 12/31/17 or sooner. Since 12/31 was on a weekend, it would have to be ordered sooner. Since the trades would need to settle by 12/29 for year end purposes, ordering the trade on 12/27 would be the most logical day to start the process. As of 12/29, all accounts would be closed at the old recordeeper and there would be no logistical way for the recordkeeper to even re-buy the money into the funds . Unfortunately, you will need to wait until the blackout is lifted and then request a distribution of funds to your IRA and buy into investment options that you choose.

Has anyone done a 5500 search to see even if there is a plan to go after? If so, then it is a divorce attorney/QDRO process that needs to be pursued. If he failed to disclose the plan, then there could be a case for fraud. In any case, this is not an ERISA attorney issue.

If it is a recordkeeper change, and not a TPA change, I would expect there to be a conversion fee, especially if there is a trust company involved. There is a lot of work in the deconversion process and hard costs charged by the trust company for the final wire, etc. The trust companies that we work will charge us a fee to close the plan on their end and that charge is done 2-3 months after the final wire. There could be trailing dividends to work with and subsequent wires and reports due too. Don't forget to mention that the recordkeeper is who the participants know and they will be fielding participant calls once the plan goes into blackout and usually for several months afterwards. There are also things like final quarterly reports and dealing with auditors that need to be handled by the recordkeeper after the assets have gone.

If it is a simple TPA change, there is generally not much of a charge, if one at all. If there is a recordkeeping change, then that is another question entirely.

My firm does provide Fiduciary Plan Administrator (FPA) services to plans. We serve as FPA for all of our clients for recordkeeping services. For compliance, we serve as FPA for about half of our clients, with the other half engaging TPAs for compliance services only or a TPA that will also provide a limited amount of 3(16) services, such as signing the 5500 form. With that being said, the employer still has the fiduciary liability of hiring us and monitoring our fees. We will do as much work for the plan as the technology will allow us to do. On the top end are employers with payroll companies with 360 integration available. That enables us to pull payroll and census information and push payroll deduction amounts/changes/esclations, loan payment amounts, changes, stops, deferral suspensions for hardships, etc. As an example, if we pull a termination date from the payroll records, we send the plan and participant specific distribution paperwork to the participant and issue the disbursement, without any action required by the employer. All distribution and loan requests go through us, we qualify the DROs, gather the documentation and process the hardships. For those without payroll integration, we do things like track for late deposits at the participant level, ask for data dumps of census data for enrollment/termination/testing purposes, etc. It takes a lot of custom written software and highly educated staff to perform these fiduciary functions. In addition to our standard E&O insurance, we also purchase liablity insurance just for the FPA functions. Our SSAE-16 audit actually contains the FPA control objectives so those pieces are audited too. It was not easy to find an auditing firm that was able to audit at a FPA level. We use outside custodians/trust companies so the money does not go through us. The employer receives regular reports from them and we encourge the employers to review our reports against those produced by the trust company. Just to sum it up, a lot of firms advertise that they provide 3(16) servies, but in reality, they provide 3(16) assistance and don't really take on the liability that goes with providing those services at the Plan Administrator level. This can leave the employer thinking that they have turned over the day to day operation of their plan, when they really have not. To the original question, there are not a lot of us who provide true FPA services. We work with independent financial advisors and TPAs who like having that FPA piece to back up whatever fiduciary services they are providing to plans.