Earnings reversion to ER

[Guest dukec]

I have an account in which we managed a portion of the retirement plan assets for those participants which selected us. (Employer is trustee) The plan has terminated and distributions have been made according to the requests by the Employer. Earnings accumulated since the last evaluation period prior to distribution. Employer has requested these funds be sent to them. I have never had a reversion of earnings before to the Employer. (For me, it just does not pass the smell test) I am aware if this were a 415 violation, then this would be the proper course. Should these earnings follow the distributions or can they be paid to the Employer? Also the employer said their attorney told them to do this.

[Belgarath]

FWIW, I'd be very inclined to make the check payable to the Trustee of the plan. The Trustee will then be responsible for proper reporting, reversion tax, and determining whether the reversion is even permissible.

I'm assuming that you just handle funds, and are not the TPA, or in any way responsible to do anything other than following the Trustee's distribution instructions...

[Guest dukec]

This was my initial reaction also. The Employer has now asked me to talk with their attorney, because they don't want me to issue in this manner.

[david rigby]

Issuing payment to Trustee might be a good idea, but...

- do you have written instructions?

- if your gut tells you something is wrong, and you ignore it, and it is later shown to be so, then you might have some liability.

I would suggest protecting yourself by talking first to YOUR attorney.