Pam Shoup

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.

Calculating the test is ministerial function delegated to you by the PA. No fiduciary liability. If the trustee signs off on the refunds, you have NO fiduciary liability. You could have an E&O claim if you did not process the refunds as directed, but not a fiduciary claim.

We take a fiduciary position with the plans that we service. However, we do notify the employer of their refund and QNEC options and tell them that we will process the refund if no response by X date. As a note, ordering a distribution from the plan would fall under the operational fiduciary responsibilities so determine if you are authorized to order the distribution if you are not a fiduciary.

Something else to consider, does the plan do loan re-financing? For example, if an employee takes a new loan for $1, and re-finances the old loan into the new loan, that would allow him to extend the remaining loan balance (plus $1) out to the maximum loan repayment period which would probably lower his payment amount to a more affordable number. (Don't forget to apply the loan rules as to the max available when re-financing out to a period longer than the original due date.)

When I started in this industry as an enroller (late 80s), the insurance companies were pretty much the only players in the small plan market. 401(k) plans were like the wild wild west in terms of regulation. Insurance companies used to "strongly encourage" you to use part of the contributions to purchase life insurance. If I recall correctly, there was a rule that said that only 25% of the expected contributions could be used to purchase life insurance. You then had to deal with a life application and the limited underwriting that needed done with the policy, policy delivery, PS-58 costs, etc. I guess what I am trying to say is that life insurance within a 401(k) plan has always been a pain and I am so glad no one sets them up that way anymore!

Oftentimes, it is not the atttorney or the participant who calls us, it is the alternate payee. When you ask the AP for the QDRO, you are speaking a foreign language to them. I tell them to send over what they have and I then contact the attorney and ask for the QDRO. More often than not, a QDRO has not been drafted (and whatever I have recieved does not qualify) so I then have to walk the attorney through the process. I prefer not to read through all of the details but sometimes I have to slog my way through just to figure what what the AP is talking about!