Another quarterly participant statement question

[Guest fiddler]

We have a number of 401(k) clients for which the investment advisor established inidividual retail accounts at Fidelity. The invetments are participant directed in that the participants must choose among various portfolios that the advisor predesigned using about 12 mutual funds. The participants receive a monthly statement from Fidelity that shows their account value in each of the funds in which they are invested. The Fidelity statements show only the funds and do NOT break out their accounts by source of money (e.g. deferrals, match, PS, etc.)

My TPA firm provides the year-end Administration services, including year-end vesting statements for the participants. Our statements show their values by source of money, both total and vested amounts, but we do NOT show the funds.

Do the participants now have to receive quarterly statements that breaks down their accounts by both funds and source, or do the above combination of statements from Fidelity and from us suffice?

[DLavigne]

My understanding was that the statements needed to show funds and didn't need to show sources, but after reading the Relius Technical Update we received yesterday, which gives several different situations and examples of what would be included on the statements, it would appear that if you cannot provide the vested balances within the 45 day period at the end of the plan year, then you should provide it on each quarterly statement. Or at least the vesting percentage for each source and then source balances so the participant can figure out his/her vested balance. The example they gave says you need to provide the latest information so on the first quarter's statement and possibly the second, you would show 2005 vesting percentages and source balances and then once you've updated for 2006, change it on the next quarterly statement. So really, the only reason you would need to include sources on the quarterly statements is so participants can figure their vested balances if they don't get that information timely at the end of the year.

Did you also know that "quarterly" means calendar-year quarter, so if you have a fiscal year plan, you still have to provide statements on the calendar-year quarters?

I can't understand how any TPA firm can comply with all these changes without doubling its staff! Do any of you feel the same way?

[Guest fiddler]

Thanks. I also read the Sungard update yesterday and it appears that their example #5 was the closest to my question. I also interpreted it to mean that we can provide the same year-end vesting statement that shows the souces four times a year and that, combined with the monthly brokerage statments they receive, will comply with the quarterly requirement. We will also include the other language that is now required regarding diversification, etc.

At least, until further guidance, that's the stance my company is going to take. Any other insights are appreciated.

[Guest crosseyetester]

Unfortunately, I have not seen the Relius Technical Update.

We have clients who have arranged for self directed accounts at the bank. Each participant then receives their own quarterly standardized trust statements which definitely do not break out investments by source. We do not do any individualized participant statements for them whatsoever. It seems that with all the wording that will need to be on the statements, something will need to be done. Is it possible to make a generic statement that can be mailed to all participants as an attachment to the bank's statements?