Admin of 412(i) plans

[pbarrett]

We are a 3rd party TPA firm that handles "vanilla" db and dc plans. We have been approached to do the admin for 412(i) plans and told they are very easy to do. What are the are the reporting requirements? Same as the DB except no B?

The Sales company would do the doc, compute the amount of inurance needed and we would only prepare the 5500. I am not sure if we would need to do any testing or not.

Anybody have any thoughts about this?

Do do purely admin, do you need to fully understand these 412(i)??

Any guidance would be apreciated.

[Belgarath]

In my humble opinion, whoever told you they are easy falls into one or more of the following categories:

A. Has never done admin on 412(i) plans.

B. Is an extreme optomist.

C. Is completely crazy.

412(i) plans SHOULD be easy. And in theory they are. In reality, you are dealing now with life insurance, annuities, and insurance agents, and many of the plans being sold improperly, or to clients who should never have a 412(i) plan in the first place. It adds up to a volatile mix, and I would recommend caution - it would be very easy to get hung on one of these plans. At the very least, I'd recommend that you have some sort of extremely specific contract with the client that limits your responsibilities only to those services/acts with which you feel comfortable.

Good luck!

[Blinky the 3-eyed Fish]

No Sch H/I is needed either.

[mwyatt]

The one thing I would be careful of (especially if other employees in the mix) is ensuring that IRC 416 TH minimum accruals are adequately provided for. Someone better check and be sure that you're in compliance (or surprise, surprise, you need a Schedule B and a side fund).

[Guest Roman]

Don't forget the monitoring of 415 limits should the client decide to cash out.

[Guest Happy Actuary]

Many people forget that they also require PBGC forms, too. (variable prem = $0)

David