PPA Quarterly Statement Requirements

[MarZDoates]

This may have already been discussed, and I know there has been no guidance yet. But does anyone know how to handle participant statements where the participant is already receiving a monthly statement from their investment company? Would the investment company be responsible for adding the correct verbage, etc? I guess the TPA would have some responsibility/involvement since the investment company may not have vesting, etc. Just kicking it around. Thanks.

[JanetM]

HMMMM, this must be a small plan where the mutual fund company send individuals stmts and then duplicates a set to you the TPA. I don't see that the fund company would have requirement to add verbage since they aren't the record keeper and don't have the knowledge to add the data.

Interesting ............ If it were me, I would get sponsor to ask fund company to send stmts to TPA only. TPA would prepare the quarterly stmts for each participant.

[Effen]

Shouldn't that be Prrrrr?

[Bird]

We work primarily on small plans and have a fair number using individual brokerage accounts. We have (had?) a decent system for handling them; we accumulate the monthly statements and reconcile them throughout the year, and just do an annual val on a balance forward basis, even though the accounts themselves are self-directed with the ability to trade daily.

First, there is no way we're doing quarterly vals, at least not without tripling (or more) our fees, and I doubt that's an option.

I doubt the investment companies will add any of the necessary verbage. I'm expecting/hoping that we'll be able to issue some kind of supplemental notice to go out around the same time as the brokerage statements that will cover the useless nonsense that is required. I'm not quite sure how the quarterly notice requirements will square with monthly statements but I'm hoping that something reasonable will develop. DOL is definitely aware of the issue.

[pmacduff]

FYI - I went to an ERISA workshop by Derrin Watson and he seemed to feel that all of the big 401(k) vendors and investment houses would add the necessary verbage or end up getting left behind.

In the scope of things, Derrin said there wasn't really that much to add. The vesting only needs to be provided once annually, so he didn't seem to think there was any issue with us as TPA providing that one statement at the end of the year reflecting vesting, but relying on the quarterly investment house statements for the other...

[AndyH]

that will cover the useless nonsense that is required

Bird's chirp made my day.

[JanetM]

Prrrrrrrrr

[MarZDoates]

WOW! Thanks for all the great input. I agree....useless information that the participants probably won't read or understand anyway! I wouldn't read it if it were on my statement! Ha!!

[DLavigne]

This question is a little off the original topic, but what about plans that have some participant-directed accounts and some trustee-directed? On the participant-directed side, they receive quarterly statements directly from the investment company but they only get an update on the trustee-directed (pooled) account once a year when we do an annual valuation. Do we really have to start providing quarterly statements just to give them a value of their trustee-directed piece? I remember hearing that the trustee-directed monies only have to be valued annually, so our new quarterly statement would carry the same value until the next annual update. It seems ridiculous to me that we would need to do that. We would have to increase our fee to provide quarterly statements and the quarterly statements really wouldn't tell them anything they don't already know.

I'd like to contact the employers affected by this to advise them of the law change and the increase in fees, but I'm not sure who it really affects at this point. Thanks.

[pmacduff]

I believe that the quarterly statement requirement is only for participant directed monies...

[DLavigne]

It's true that only participant-directed monies need quarterly statements, but Sal Tripodi replied to a Q&A in the PPA webcast specifically about plans that have both participant and trustee-directed monies. The reply was that both need to be reported on the quarterly statement, but only as of the most recent valuation for the pooled portion. That's why it seems silly to me to duplicate information the participant has already received (either on the quarterly investment statement or the annual statement from us).

I spoke with my boss this morning about the issue and we've decided to take the language in the law literally. If the investment company provides quarterly statements on the participant-directed and we provide annual statements for the pooled, then we're not going to give quarterly statements on the pooled. The regulation says annual for trustee-directed, so that's what we're going with.

We also decided that if an investment company does not provide the investment language that's now required, we will send out a one-page supplement with only the investment language that the employer can hand out each quarter to the participants.

If more guidance comes out about this, then we may change our ways of course.