Reportable Transaction

[Guest cascigm]

In 2004 a 401k plan that was and still is participant directed, changed investment platforms, and participant investment elections were mapped to like funds.

The auditor is saying this is a reportable transaction, since "the participants did not have a choice as to where their monies were invested".

I disagree.

[BeckyMiller]

And you disagree because????

There may be sound reasons for your disagreement, but if you are disagreeing because you believe the transaction is participant directed, then I must disagree. The ERISA regulation, exempting participant directed events from reportable transactions, reads:

Special rule for certain participant-directed transactions. Participant or beneficiary directed transactions under an individual account plan shall not be taken into account under paragraph ©(1) of this section for purposes of preparing the schedule of reportable transactions described in this section. For purposes of this section only, a transaction will be considered directed by a participant or beneficiary if it has been authorized by such participant or beneficiary.

Since the decision to switch fund families was not a participant decision, I agree that, absent some other exclusion from reporting, this is a reportable transaction.

[Guest cascigm]

Relative to participant election, our thought was that in the previous plan the participant has elected his/her funds, either via the initial enrollment or from that point via the 800/internet site.

Prior to the plan conversion, it was communicated to participants that they had 30 days to view the "map" and determine if that was where they were comfortable transferring into, e.g. large cap growth fund to large cap growth fund. Once out of blackout they were then able to make whatever changes they desired.

Provided the "map" was accurate in going to like asset classes, particpants had a choice as to where they ended up.

[Guest cascigm]

Just a follow up, the auditor agreed and has determined this not be a reportable transaction.

[R. Butler]

A lot of auditors will stick with the opposite side. We've always reported in those circumstances, but its probably not that significant either way.