delayed transfer of 401(k) plan assets

[chris]

Client employed new tpa to handle 401(k) plan. All plan funds to be moved to new investment manager/company. Employer directed old investment co to cut check to move the funds. Employer sent check to tpa so tpa could get money to new investment co as per tpa's request. TPA lost the check and did not tell employer for some time. Employer talked to tpa and tpa gave excuses as to why the money had not shown up. Meanwhile, employer got stop payment orders for the checks and had the old investment co to cut a new check. The funds have been uninvested in any manner for 2 months. Also, deferrals have not been invested for that same 2 month period. The VFC Program addresses the deferrals issue, but is there anything that addresses correction of the nonivesting of the plan assets? Any other suggestions appreciated.

[Guest FREE401k]

First step: find a new TPA.

[chris]

Already done.

[Kirk Maldonado]

Given what has happened in the stock market recently, the participants are probably lucky that the amounts were uninvested.

Would you propose to take amounts out of their accounts if they had lost money if the amounts had actually been invested during that time period?

[chris]

Your statement as to the investment performance of the market may be right on.

As to the question, I think that the fact that they would have lost money would tell you you don't need to pay anything in in order to correct. Based on the language in EPCRS, you clearly cannot take anything away from the participants if that were the case.

Wouldn't you think the numbers would need to be run to know if correction, i.e., employer needing to pay money into the plan to make participants whole, is warranted?

[Fredman]

I think you must run the numbers, especially if you want to prove the Plan is due $0.00. The way I see it, since the end of September the DJIA is up about 13% and since the end of October its up about 10%. Someone might have to dig deep on this one.

Who cuts a check when transferring plan assets? That's asking for trouble.

Good Luck.