pgold Posted March 25, 2009 Posted March 25, 2009 A company with 10 employees sponsors a profit sharing plan. An investment advisor convinced the trustee to puchase an annuity with all the plan assets. The annuity is based on the trustee's age, there are no provisions for the employees. The trustee did not understand what he was purchasing. Does he have any recourse in getting his money refunded? Can anything be done? Is the trustee liable for any breach of fiduciary conduct?
J Simmons Posted March 25, 2009 Posted March 25, 2009 The trustee may have a legal claim based on contract and other business theories against the investment adviser (and annuity provider), but based on my experience, the investment adviser and annuity provider likely have disclaimers--perhaps even signed by the trustee. As for an ERISA claim, the trustee's theory would hinge on being able to snag the investment adviser into the loop of ERISA fiduciaries to the plan, and that the investment adviser breached that duty. Hopefully, no more than 3 years have passed for that one since the trustee knew or had reason to know of the improper investment product. See Browning v Tiger's Eye Benefits Consulting, 4th Cir #06-1404, Feb 26, 2009 (unpublished opinion). Is the trustee liable? It doesn't sound like he acted very prudently signing up to invest the plan assets into an investment product (i.e., annuity) that he did not understand. John Simmons johnsimmonslaw@gmail.com Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.
Bird Posted March 25, 2009 Posted March 25, 2009 Has it actually been annuitized or is it a deferred annuity that can be redeemed at some later date, and just has to have someone listed as the annuitant? That's not necessarily a problem. I've seen a lot, but it's hard to believe that anyone could be that utterly incompetent to buy an immediate annuity on one life using plan assets. Ed Snyder
K2retire Posted March 26, 2009 Posted March 26, 2009 I've seen a lot, but it's hard to believe that anyone could be that utterly incompetent to buy an immediate annuity on one life using plan assets. Apparently you have much smarter clients than I do!
Jim Chad Posted March 26, 2009 Posted March 26, 2009 I'm wondering about the same things as bird. For 25 years I have seen annuities in small plans because the owner wanted some money in a fixed account. Among my plans there have been no real problems. PGOLD When you say it is based on the owner's age, are you saying that it is paying a monthly benefit guaranteed for the life of the owner? This would be bad. But if you have an annuity contract that has the owner's name and age on it, that isn't bad at all. There area lots of options to get money out, if some of the 10 employees leave and are entitled to a distribution.
pgold Posted March 26, 2009 Author Posted March 26, 2009 I'm wondering about the same things as bird. For 25 years I have seen annuities in small plans because the owner wanted some money in a fixed account. Among my plans there have been no real problems.PGOLD When you say it is based on the owner's age, are you saying that it is paying a monthly benefit guaranteed for the life of the owner? This would be bad. But if you have an annuity contract that has the owner's name and age on it, that isn't bad at all. There area lots of options to get money out, if some of the 10 employees leave and are entitled to a distribution. I am trying to get more info. Thanks for your response
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now