Guest Libby Posted March 15, 2002 Posted March 15, 2002 Could a TPA receiving a check on behalf of a retirement plan participant from a custodian or trustee deposit it in the TPA's account, with the TPA then handling the payment process and actually writing a check to the participant? What about the TPA being given checkwriting authority by a trustee over a trust account?
Guest b2kates Posted March 16, 2002 Posted March 16, 2002 I do not see why not. The bank I used to work for was both a Trustee for plans and the paying agent for plans it did not Trustee.
Guest Mike Kimball Posted March 16, 2002 Posted March 16, 2002 see recently published IRS Announcement 2002-12, and IRS Reg 1.408-2(e) re custodial accounts, nonbank trustees, nonbank custodians. My opinion (also stated in the Announcement, 7th paragragh) is that once the money leaves the "qualified" trust and goes into any custodial account that does not have the protection given under 1.408-2(e), it is no longer qualified money.
Guest Libby Posted March 18, 2002 Posted March 18, 2002 Suppose the TPA is an individual. Don't you have a "plan asset" problem? Wouldn't the amounts have to be held in trust? Would the plan document have to appoint the TPA as the payer? Wouldn't the TPA have to be bonded? Is this something that is done regularly?
david rigby Posted March 18, 2002 Posted March 18, 2002 Why not do it the right way? Why would you want to do this in a manner that would create doubt about exactly what transaction took place? Why create a "muddy" situation that you have to explain to everybody every time? I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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