Take over plan & mapping

[blue]

PPA provides a special rule that extends 404© protection during “fund mapping” as long as the following three requirements are followed:

1. Notices provided at least 30 days before.

2. The participant or beneficiary does not provide affirmative investment instruction before the effective date of the change.

3. Immediately before the effective date of the change, the participant’s or beneficiary’s account was invested in accordance with elections made by the participant or beneficiary.

So, if I am reading this correctly, you have to allow the participant to make investment elections. Correct???

Most times if we take over a plan the participant’s account is mapped and they are allowed to change elections after the initial mapping.

How do others handle take over plan??

[Kimberly S]

We require the participants to make their own elections instead of mapping.

[zimbo]

If you try to comply with this PPA wording to ensure full 404c protection, then you cannot actually do mapping the way it is usually done. I don't know if that was an inadvertent result in the law or not.

One of the advantages to mapping is that you can get all the converted participant accounts invested comparably to how they were before instead of waiting weeks or longer for the files to be transferred and reconciled.

Perhaps one option is to temporarily forego 404c protection during the mapping period in order to preserve the normal mapping process. Since the participant will once again have full rights of investment elections once the files are reconciled, the period of exposure should be fairly limited.

[blue]

Thanks for the responses.

I am still confused -

If you map then allow participants to make investment elections, do you really have 404© protection for those partiicpants who never make investment changes.