Patricia Neal Jensen

Your original approach is the correct one. One advantage of being an independent TPA is that you can create a plan which is not limited to one set of investment contracts. The other part about "eventually they can terminate the plan" is also a problem. The 12 month rule will always be a problem in this situation. You will never be able to terminate plan #1. Advisors and some vendors in 403(b) confuse contracts with plans. I suggest it is part of the advisor's confusion concerning any possible advantage of a second plan. What would the advantage be, anyway? There is nothing you couldn't do with your document and administration policies and procedures. You can certainly list contracts #1 as "Unapproved" for contributions or transfers but part of the plan for the 5500 etc. I think the fact that the current accounts do not allow loans makes administration easier. Just use the loan policy to limit the loans and the amount considered for a loan to the amounts in the new investment contracts. It may also motivate some participants to move their money. I disagree with Flyboyjohn about 401(k)'s of course. Testing can be a huge problem for nonprofits. What would be the advantage of a 401(k)? (The only one I can think of is that the 12 month rule does not apply in this situation... if you were going to follow this "create a 2d plan scheme.")

Sounds like you are doing a very good job! All of these funds are registered with the SEC and the returns are public so you can "Google" something like "comparison of Vanguard funds" and you will find a bunch of information that may be helpful. In other words, there is history on these funds and you don't need the statements from this account to see what it is.

ERISAAPPLE is exactly correct. A church cannot even "accidentally" become ERISA (Unlike the troubles that can befall a "Non-ERISA" sponsored by a 501(c)(3) organization.). No employer contribution makes these plans ERISA; no accidental filing of a 5500 makes them ERISA. Eligibility and benefits can appear quite discriminatory in these plans (if you are used to ERISA rules). A specific written election must occur for these plans to be ERISA. Our firm does quite a few of these and I have never had a church elect ERISA.

Good point, ERISAAPPLE. We do not accept appointment as Plan Administrator, however. Our business model precludes putting ourselves in a position where we would have hiring and firing responsibilities over our brokers and advisors.

Thank you.

I agree with the above. Kind of a related issue: If a 403(b) is being terminated, TIAA will "distribute" the individual annuity contracts so that they are no longer plan assets with regard to the plan termination requirements. Any way we could get this treatment for terminated participants in an ongoing plan? We have plans that are over the "count" for a required audit just because of terminated participants with individual annuity contracts.

Thanks, Larry.... sheesh... I am blushing

We have a small 3(16) operation in our TPA shop. I don't see how one can sign the 5500 without being a fiduciary but would not use this as a "sales" point. We view it as a plan sponsor option because whoever hires us to do this is a fiduciary when they employ us and when they authorize us to sign the 5500. Plan Sponsors should spend the money to hire us to do things they don't know how to do or to make sure someone has done these things; not to sign documents.

Thanks, Carol. Hope this finds you well.

In 2018 we will be terminating a 403(b) plan which the plan sponsor has not yet restated for PPA. The restatement deadline is 2020 so we are within the restatement period but nowhere near the deadline. Do we have to restate this plan to terminate it? (The assets will be paid out in 2018; that is not an issue in this case) Thanks!

Thanks but withdrawal provisions are irrelevant. The money does not have to come out of the contracts. TIAA just has to distribute the contracts. This is done all the time when a plan terminates.

Do not do this. It is a Prohibited Transaction.

This is obviously not "legal" advice but I have never in my 40 year career had a former participant in this situation repay the overpayment. This is the plan's problem. Walk away.

Plan Sponsor has old TIAA individual contracts in 403(b) plan. More than 90 of these contracts belong to terminated participants. We (the TPA) would like TIAA to take some action to show that these contracts are distributed for 5500 purposes. Has anyone had experience they could share with this issue? Thanks!

Good morning, Jeanie. Thinking about you. The markets are at 2 week highs this morning. Hopefully, this will be reflected through the close and you will be able to see the result (again, depends on the account's investments) tomorrow morning. (Mutual funds do not report intra-day trading so if the markets continue to do well, the Vanguard funds may show it tomorrow morning.) As has been suggested by others on this site, don't rush this the decision to exit the market, if possible. There also will be a lag between the communication of your decision to leave these accounts and the execution of that decision. Hopefully that would only be one day, but, as noted above, mutual funds only trade on values at the close of business each day. For example, if you gave notice to sell today, you would receive the values as of the close of the market today and you would see it tomorrow. I am an attorney not a licensed broker so please note that I am sharing from my own experience and not as an adviser. Peace to you.

Again, so sorry for your loss. Not defending Vanguard because they can be slow, as you experienced, but they did know "know" your husband was deceased until they received the death certificate. I think your complaint is with your husband's employer's HR department. They should have helped you through this process in my opinion. Unfortunately, I do not think you will succeed with any claim against anyone with regard to this perceived loss. You may be able to keep the account active and hope that the stock market goes back up. It has plummeted during the time period you reference, again, in my opinion, due to President Trump's idea that tariffs would not cause market retaliation. It (the market) may very well right itself in a week or two. The best of luck to you. A trustworthy adviser might be a valuable addition to your team.

A new (to our TPA firm) 403(b) client has not filed 8955 SSA in the past due to confusing "instructions" sent by internet by a vendor supposedly doing administration. Our TPA firm is filing for the 2017 year (the first year for which we are responsible) and the client is anxious about the possible penalties. We know that there are possible penalties, but also note comments which say don't "self- file" on the penalty payment ("According to the IRS website, you should not voluntarily mail in any payment of penalties. If they decide to assess a penalty, they will contact you directly with details."). Please share any experience with this. We would like to be able to tell the client whether or not to expect assessment of penalties. Thanks!

Thank you, both! Flyboyjohn.."changing" to a 401(k) is a complex and sometimes impossible problem. Also deferral testing is a killer for that idea. I agree generally with the concept if we were starting with a blank slate. Luke Bailey...From my research so far I think 2 completely separate documents with separate investments would be required. Although we don't have trusts, we still may be able to attribute specific assets to specific plans. Will see if the client thinks this is worth more work and research.

I agree with David Rigby. Employees do not have to "agree" to have accounts set up for them in DC plans with employer nonelective contributions. The problem comes when s/he terminates. Hopefully, the cashout provisions will permit rolling this out to an IRA. I had an employee eligible for a plan with a 3 to 1 match once who refused to sign up for the plan because he didn't want the government to "find" him. We all tried valiantly to explain that if they were looking, they had already found him but alas! He walked away from this wonderful match.

I have a nonprofit client with a 403(b) plan and all employees are eligible. The client is anticipating that its participant count will be over 100 at the next plan year end (we have informed them about the 120 count rule for the plan's first year at the large plan status). They have a logical organizational structure reason for splitting this plan into two smaller plans. Our firm has done this many times for 401(k) plans but this is the first situation which has presented itself in 403(b). Has anyone done this for a 403(b)? Any comments? Thanks!

I don't think this money is "compensation." Dividend?

You will make this a MEP if they are unrelated and adopt the same plan but non-electing churches do not file 5500's so what would be the problem?

No Universal Availability rules apply to Church Plans and they are not ERISA (unless elected, which is unlikely). A Church cannot "accidentally" elect ERISA (completely different than a Non-ERISA plan sponsored by a 501(c)(3) org.). If they elected ERISA, there would be a written document stating that this was so. I have lots of Church plans and have never had one elect ERISA. Why would they? I would suggest the retroactive amendment and advise the client to seek counsel concerning further remedies or reporting. Unless you are a hospital trying to eliminate employees from your DB plan by hoping that you are a church, I see very little audit activity in this area.

I agree with all above and suspect this was written with a DB plan in mind not a 401(k). Still a problem but at least for a more rational reason.

Again, ignoring the BIG problem here: No 401(a) plan can be merged into or converted into a 403(b). This transaction is defective.