404(a)(5) for Terminating Plan

[nancy]

If a plan is in termination process, resolution adopted but payouts have not occurred must they provide the participant fee disclosure notices? At what point does this end?

[MoJo]

If a plan is in termination process, resolution adopted but payouts have not occurred must they provide the participant fee disclosure notices? At what point does this end?

We have the same issue - and have yet to find an exception to the rules that would allow us to not provide the notice. Theoretically, if the plan remains participant directed until the assets are depleted, the notice appears to be required.

While drastic, some have suggested amending the plan at the time of termination to eliminate participant direction - but that raises other (fiduciary) issues.

[John Feldt ERPA CPC QPA]

If there are still assets in the plan as of the disclosure deadline (e.g. Aug 30), then the disclosure seems to be needed.

If it's all paid out, then the annual notice, which discloses the possible future fees, should not be needed.

[Bird]

They are required but what are the consequences of non-compliance? Exposing the trustees to a complaint/lawsuit by the participants that they didn't have enough info to effectively manage their accounts? I'd weigh the costs and risks on this.

[kwalified]

1) Does disclosure apply to pooled accounts if participants are paying TPA fees?

2) What if a participant directed plan is paying TPA fees from forefeiture/holding account and it does not directly come from participants accounts?

3) How should disclosure be structured if fees are being paid based on an account percentage? Surely you can not list each participant on a page and disclose what each one pays in admin fees.

[chc93]

1) Does disclosure apply to pooled accounts if participants are paying TPA fees?

2) What if a participant directed plan is paying TPA fees from forefeiture/holding account and it does not directly come from participants accounts?

3) How should disclosure be structured if fees are being paid based on an account percentage? Surely you can not list each participant on a page and disclose what each one pays in admin fees.

1. I don't think the disclosure applies to pooled accounts since the pooled account is paying the fees, and the participants do not have the ability to direct investments in the pooled account.

2. The DOL FAB 2012-2, Q&A-7 appears to say that if forfeitures/suspense/holding account is paying fees, these do not need to be disclosed.

3. I think the DOL FAB references a model "comparative chart", which should show all investments available along with their performance and fee/expense structure. This is for the annual disclosure. For the quarterly disclosure, the dollar amount of fees need to be disclosed on the participant statements.

I hope this helps...

[BG5150]

2) What if a participant directed plan is paying TPA fees from forefeiture/holding account and it does not directly come from participants accounts?

Unless the sponsor makes a declaration that the ER will not assess fees to participant accounts, there still is the possibility of it. So it must be disclosed. Even if the the ER and/or forfeiture account paid for the past 20 years. The disclosure indicates any and all fees that COULD be applied.