Canadian Trustee of a US plan?

[AlbanyConsultant]

Our client was purchased by a Canadian company ("CC") who re-incorporated the US company ("USC") as a subsidiary and terminated USC's PS plan. Now they are starting a 401(k) plan for USC. Is there an issue with the owners of CC wanting to be Trustees of the plan? Do they not count as falling under US jurisdiction, even if the plan assets are with a platform such as American Funds Recordkeeper Direct?

[PensionPro]

From the ERISA regs, "Requirements concerning trustees. The trustee or trustees referred to in paragraphs (a) and (b) shall be either named in the trust instrument or in the plan instrument described in section 402(a) of the Act, or appointed by a person who is a named fiduciary (within the meaning of section 402(a)(2) of the Act). "

Not very helpful. The Tax Code is not any more helpful in defining who a trustee is. However, Rev Ruling 81-114 states the trust must be " a valid trust which is recognized under local law." Bottomline: state law governs unless there exist contravening federal laws.

[Guest Sieve]

Under IRC, a qualified plan's trust must be "created or organized in the United States". Under Treas. Reg. Section 1.401-1(a)(3)(i), the trust must also be a domestic trust at all times. Look at Treas. Reg. Section 301.7701-7, which differentiates between a domestic & foreign trust, and see if that helps. (Note the partial safe harbor of a qualified plan's trust for some purposes: Treas Reg. Section 301.7701-7(d)(1)(iv)(A).)