Custodians tracking loan information

[Stevo-PDX]

We are working with a new startup custodian, although the person behind the custodian has 25+ years experience with other trust companys.

This custodian is requiring that with each deposit that either the plan sponsor or the record keeper provide the detailed loan principal and interest amounts with each deposit. They claim to have an ERISA fiduciary and a bank regulatory responsibility and a to provide the information on their statements. We disagree that the loan is an asset to them when the plan trustee holds the notes so they should have no reporting requirement associate with the loan.

I've used 3 other custodians that acted in the capacity as a custodian and a corporate trustee and they have never requested detailed loan information. They have only gone as far as wanting a breakout on any deposit as to the type of money and nothing else. I have also never had an auditor question a certified trust statement about the loan information. They have always relied upon the records of the record keeper for loan information. If the custodian is acting as a corporate trustee too, then I can see a stronger argument for reporting the loan detail information.

Does anyone have any information that would support the custodian's position that they must receive and report loan information and report the loan balances on their statements? If so, how would this be any different then them not tracking the plan's self-directed brokerage accounts or other outside investements (employee stock or property)?

I'm looking for specific sites in ERISA or federal/state banking regulations that would require the tracking of loan information.

[JanetM]

IMHO the custodian/trustee is requried to properly classify all assets, income and expenses on certified statements. Auditors of the plan can not rely on record keepers numbers unless the trustee certifying the statements will certify the record keepers numbers. The custodian needs to have the details to properly record transactions.