Mis-Titled Self-Directed Brokerage Account

[KateSmithPA]

Qualfied plan allows self-directed brokerage accounts. Participant opens a SDB and has annual contributions deposited over several years. Plan is not in name of plan but in name of participant. Now participant is terminated and wants to rollover account, but investment company won't rollover the funds since the account is not titled in the name of the plan.

May the trustee correct this by having the SDB account retitled in the name of the plan?

Are there more serious consequences?

By the way, I have no idea how this happened. Not a client, but one of my partners posed the question.

[JanetM]

First question is were the assets included in plan assets for 5500 reporting? If they were you could show that it is a simple error in account title. I don't think this is qualification issue (but I could be wrong). This happened many times with clients - lawyers and doctors mostly who had the SDB plans and it was never a serious problem.

[namealreadyinuse]

This does happen a lot. The problem is failure to hold plan assets in trust and the technical fix is to treat the original investment as a distribution to the participant, but nobody actually does that. Do what you can to clean it up and get the assets retitled in the name of the trustee. The 5500 / audit issue is a great point that hopefully is on your side.