Correcting An Account Error

[Guest Karenm]

There is a participant in a plan I am working on who has two separate allocation elections (one for a rollover balance and one for current deposits). The investment company directed the recordkeeper to change the lifestyle portfolios in all their plans. When the portfolios were changed, the recordkeeper re-balanced both the rollover account and the current account for the participant mentioned above. This was a problem because the participant had the rollover account invested entirely in cash. The transaction occurred during July and August leaving the participant with losses of close to $8,000 (at this point).

If the Investment Company or the recordkeeper restores the account, is there a problem with the $8,000 being deposited to the Plan.

Is there any Plan level reporting to be done regarding this (other than questions on annual reporting forms).

This is really scary stuff as far as I am concerned and I want to be sure we review all of the issues with the client.

Finally, I was curious about who might have the responsiblity for restoration; the RK or the investment company but when I asked this question under the recordkeeping topics, NOONE responded (although 84 members reviewed); I felt shunned. Was it intentional? Should I have not asked that question?

Well if anyone knows if the $8,000 deposit is a problem and whether other corective actions are necesary I really appreciate the help. If anyone knows who might be liable, the rk or the investment company, I appreciate the help but do not want to find myself in trouble for asking the wrong questions.

[QDROphile]

Record keeper should fix its mistake unless it contracted for no liability. The fiduciary who allowed a contract for no liability would then be responsible for fixing the mistake. It is not a problem to restore the account because of the mistake.

You cannot rely on what you see on the board.