"Omnibus" account for tax withholdings

[Guest Doug Johnston]

Our firm administers numerous small, trustee-directed, balance forward DC plans. We find that we spend WAY too much time holding hands with plan sponsors concerning the collection, deposit, and reporting of income taxes withheld from distributions from these plans. We are considering the idea of setting up our own "omnibus" tax account and EIN to collect, deposit and report distributions from all of these plans (under agreements with the sponsors.) This would be a great additional service to the sponsors and would probably SAVE us time.

I know many larger financial institutions handle distributions this way. Does anyone know what is involved in setting up the system? What do other TPA firms do to minimize distribution inefficiencies?

Thanks!