"Special Trustee" responsible for contribution deposits

[AndrewZ]

FTWilliam has added an Adoption Agreement item requesting the identification of a "special trustee" responsible for determining and depositing contribution deposits. The DOL requested they add it so that it can "identify the fiduciary responsible for timely deposits."

The Adoption Agreement options are: "CEO of Plan Sponsor," "Trustee," or "Other."

Obviously, in most cases we don't necessarily know who at the company is actually making the contribution deposits, and whether that person is even who the DOL considers to be responsible. We obviously can't make a payroll clerk (or even an HR Manager) a fiduciary.

What are other TPAs doing as a reasonable solution for this? For one-participant plans we're fine selecting "Trustee" since it's obviously the same person. For others, we're thinking of just stating the top officer (CEO/Managing Member/Managing Partner/Proprietor) since they're ultimately responsible for delegating the contribution deposit responsibility -- though that's probably not exactly what the DOL is looking for.

Thanks.

[QDROphile]

This is a demonstration of the Department of Labor's zeal exceeding its intelligence and knowledge of the law.

[Peter Gulia]

In fairness, EBSA's FAB 2008-01 said only that a trustee can't be relieved of a duty concerning collection of contributions unless some document provides for the duty to be allocated to another fiduciary (most often, a non-trustee that directs the trustee).

The provision AndrewZ describes might be a way to accomplish the goal of allocating the responsibility to somebody, but it is not the only way. And it happens not to be what the Field Assistance Bulletin suggested. (The FAB explained that a document could provide for a non-trustee fiduciary to direct the trustee.)

To respond to AndrewZ's query, what do BenefitsLink people think about checking the "other" box and filling-in on its blank line "the Administrator"?

If the typical choice for "Administrator" is the plan's sponsor, this might make the organization, rather than a particular natural person, responsible to decide whether to attempt collection of a contribution.

[austin3515]

We have that in ours too (Corbel), my understanding is that the DOL insisted upon it. The corporate trustee sure ain't gonna do it so someone has to.

Who is responsible and who does deposits are two unrelated questions. For a small busines it should be the owner generally because he/she holds the purse strings after all. For larger organizations, it would be the CFO, who has overall responsibility for the allocation of funds. Of course that named person has minions do the work, but as the saying goes, "the buck stops here."

Edit: your post does not specify but our document only requires it in the event of a corporate trustee. IF an individual is a trustee he or she already has that responsibility. I suppose if you had an individual trustee and designated a special trustee for that specific purpose, the responsibility would be transferred...

[mbozek]

Can someone explain when a plan contribution is deemed by the DOL to become a plan asset since DOL can only regulate plan assets. Does DOL deem a plan asset to be created on the date the contribution is due?

[K2retire]

Can someone explain when a plan contribution is deemed by the DOL to become a plan asset since DOL can only regulate plan assets. Does DOL deem a plan asset to be created on the date the contribution is due?

Doesn't the answer to that depend on the type of contribution? Deferrals are deemed plan assets as soon as withheld. I'm not sure how discretionary employer contributions could be considered plan assets until they are actually deposited. Stated match, stated profit sharing or money purchase plan contributions are probably different than the others.

[austin3515]

Our doc has the Special Trustee sign the following:

I, the undersigned, accept the appointment as Special Trustee of the (Plan), and agree to all of the obligations, responsibilities and duties imposed upon the Special Trustee under the Plan and Trust. The sole responsibility of the Special Trustee is to collect contributions owed to the Plan. No other Trustee has the responsibility to collect contributions owed to the Plan.

[MoJo]

Can someone explain to me when the DOL acquired jurisdiction over the contents of the plan document? ERISA requires a "written" plan document - but the only requirements I'm aware of are those for "tax qualification" under the Internal Revenue Code - which then, under the IRS program , are reviewed in issuing a determination letter under the M&P program guidelines. When does the DOL even look at it?

[mbozek]

Austin:

Who would sign an oxymoronic document that requires a special trustee to agree to all the obligations and duties imposed on the trustee but then states that the trustee has only one responsibility- collect contributions? What does collect mean?

[austin3515]

You'll have to ask Corbel I have no choice but to trust them!

[AndrewZ]

Peter, I like the idea of saying "Administrator," but FTWilliam says it has to specify an individual by name or title. (I'm not sure then why they have "Trustee" as an option as there can be multiple trustees). But that's similar to my thinking of just naming an officer position.

I even hate to specify "CFO" unless that person is always going to be a named trustee. Again, we can't really push a formal position of trustee or fiduciary on an individual who's just in charge of processing contribution deposits (even though the DoL obviously does consider them a fiduciary).

Austin, our doc requires it even when the plan is self-trusteed. Interesting that Corbel interprets the regular named trustee as satisfying the requirement. Maybe we should just specify "trustee" for all?

I can definitely understand DoL wanting to identify the party in-house responsible for contributions if regular trustee duties are assigned to an unrelated entity. Maybe they're only thinking in that scenario when communicating this requirement to the document providers?

[Peter Gulia]

AndrewZ, thank you for the helpful information.

Is the condition that the plan must specify a natural person as the "special trustee" stated on the Adoption Agreement or in its written instructions?

If so, I might seek more information about whether the Internal Revenue Service requires adherence on that point as a condition to reliance on the IRS advisory letter.

If the condition is not so stated, a user might consider and evaluate the possibilities.