Losses Due to Incorrect Investment Mapping

[spartytax]

Has anyone considered what, if any, type of correction would be corrected for failure to properly map participant's accounts to certain investments when switching service providers? The accounts were supposed to be mapped to the same investments in which they were already invested prior to the transition, but it was discovered that at least participant account was improperly invested and suffered a loss as a result of the improper mapping. The employer/TPA intends to make the participant whole, but I was wondering what, if any, any other corrective action must be taken?

[mphs77]

I, for one, would think that a public flogging of the broker (or investment professional) for not doing his job to ensure the mapping occurred properly must be taken.

[ESOP Guy]

If I recall the self correction rules you need to also set up procedures to document how the plan will avoid the error in the future.

Flogging might be a good part of the procedure!

[spartytax]

Any thoughts as to the actual proper correction? Thanks and Happy Holidays.

[ESOP Guy]

I think you do have the serious answer along with the not serious answers.

You need to make the person whole and document procedures that allow you to avoid such a mistake in the future is pretty much all a self correction requires.

Where you expecting a more complex fix being needed?

[Bill Presson]

I would be a little curious as to whether it was actually a single participant. Generally all assets in a fund are moved to a like fund (which we know). But was a single participant the only one invested in the affected fund?

[david rigby]

Ideally, the reference to "set up procedures" in Post #3 is double-edged:

- The external vendor should improve their procedures, and should identify those improvements to you (i.e., the plan sponsor), and

- The sponsor should improve its own procedures (let's just call this "proofing").