Trustee never accepted appointment - now what?

[t.haley]

DB plan started 1-1-13. Based on information from client, named Company X as plan trustee. Plan document and SPD identify Company X as plan trustee (but Company X did not sign the plan document or any other document accepting position as trustee). Now plan sponsor wants to "remove" trustee and appoint himself as new trustee. Company X says it did not know it was the trustee and never meant to be the trustee, just investment provider. Any ideas on the best way to fix this?

[My 2 cents]

Step One: Make sure everyone is awake and paying attention.

[Belgarath]

Step two - go ahead and have the existing trustee-who-isn't-really-a-Trustee removed, and he can appoint himself as Trustee. Does the Plan document have "failsafe" language where if no Trustee is appointed that the Employer/Plan Sponsor is the Trustee? If so, I think you probably don't have any worries. If not, then if the Employer/Sponsor performed any Trustee duties, you might want to check with an ERISA attorney about some sort of resolution formally ratifying any acts performed as a Trustee while not officially being named a Trustee - that's getting out of my league.

[t.haley]

Belgarath - thanks for the reply. We are opting for a "corrective" amendment to the plan stating that the trustee named in the plan never acted as the trustee and the "correct" trustee has acted as the trustee since the original effective date of the plan.

[QDROphile]

Only certain corporate entities can be a trustee - those with statutory trust authority. Otherwise it must be an individual.

[Peter Gulia]

For QDROphile's point about whether a business organization that is not a bank, trust company, or other financial institution may serve as a trustee, check relevant States' laws.

While many States’ laws prohibit a corporation that’s not a bank or trust company from engaging in a business of serving as a trustee or other fiduciary, a State’s law might permit a corporation to serve as the trustee of a trust for an employee-benefit plan for the corporation’s employees. For example, Pennsylvania’s Banking Code permits a non-bank corporation to act as trustee of a trust “for the benefit of [the corporation’s] own employe[e]s[.]” 7 Pa. Stat. § 106(a)(iii).

https://govt.westlaw.com/pac/Document/NDECBA6206BE411E28981FA740B828C88?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default)

I used to have a many-States survey, but no longer maintain it.