Who has final say on plan assets?

[AlbanyConsultant]

I have a plan where the Plan Administrator is the Trustee - common enough. However, this person is not the plan sponsor, as he does not own the company sponsoring the plan.

The plan sponsor entered into an agreement with a management company (MCO) to take over operations of the company (and eventually purchase it sometime in 2015 if all goes according to plan) back in November 2014. MCO then decided that effective 1/1/15, all plan contributions would be made into their plan (which is a MEP).

The Trustee heard about it when the fund platform for the "old plan" asked why they hadn't received a payroll deposit yet in 2015. Suddenly all this was uncovered.

The Trustee claims that he had no knowledge of this happening, and is demanding that the 2015 contributions go back to the "old plan" because as Trustee and Plan Administrator, he is still responsible for that money and he didn't authorize it. MCO says that they are in the right (well, of course they say that) and that it was part of the responsibilities they assumed when they took over management in 2014 - they let it continue as it was through the end of 2014 and then switched it at the beginning of the new year.

My first reaction was that as long as the actual original owners of the company signed a resolution to allow the company to adopt MCO's plan effective 1/1/5, then this is OK, and it even makes for easy testing. But then what exactly is the role of the Trustee/Plan Administrator? All responsibility but no power?

Thanks for your advice. Any links would be greatly appreciated (not that I don't trust your responses, but so I can provide them to the players involved).

[ETA Consulting LLC]

I think they would've fired the Trustee, or the Trustee would've resigned. At the end of the day, asset placement is a Trustee responsibility. It is the Plan Sponsor who hires the Trustee. So, you're hiring someone to perform a duty and then undermining their position.

Good Luck!

[ESOP Guy]

If I understand it correctly aren't there in fact two plans? 1) Old plan (pre-2015) that is a single employer plan and 2) the MEP

So isn't the trustee and administrator you are asking about the trustee and administrator of plan #1 and have all the rights and powers afforded them?

This isn't my area of expertise but it sounds like the business owner needs to make some decisions and have some resolutions drafted. If he wants the money going to the MEP and stop going to the old plan I think it would take a resolution. If he wants the assets from the old plan to go to the MEP it would seem like that would need to be done via an amendment or resolution.

But for now I think you have two plans with two trustees and administrators. What isn't clear which plan is due the contributions as it sounds like the employer may have adopted two plans. The owner needs to make so resolutions to clear that up,.

That is my take on the fact set as I see it .

[mbozek]

Only way to find out the answer is to have counsel determine what action the employer took with regard to the old and new plans. Was old plan terminated or did employer establish new plan (MEP) beginning 2015 for futre contributions? Its the plan sponsors call as what to do with the Plan that has a trustee. Someone at the plan sponsor has to make a decision as to who is plan administrator/trustee of the plan going forward and what is the status of the plan with the trustee.

[AlbanyConsultant]

Had a conference call today to clear this up. An owner of the original plan sponsor signed a resolution to adopt MCO's plan effective 1/1/15, and that's where the deferrals have been going ever since.

I agreed that is a sponsor-level decision, and therefore they really did an end-around their current Trustee, who is still responsible for the "old" assets. The goal is to terminate or merge the "old" plan, but MCO wants to wait until 2014 admin is done first (which is reasonable).