Karoline Curran Posted August 30, 2018 Posted August 30, 2018 Hello. I'm new to these message boards and have a question. I work for a small TPA firm in the Midwest. One of the financial advisors on one of my plans only allows participants to make deferrals in dollar amounts, not percentages to make it easier for the CPA who does payroll and enters the contributions into the investment house's website. Is this an issue, or is restricting them to a dollar amount not ethical.
PensionPro Posted August 30, 2018 Posted August 30, 2018 This is not an ethics question, rather a plan document question. If the plan is administratively requiring deferrals in dollar amounts and not percentages it should be okay as long as it does not conflict with any provision in the plan document and it is uniformly applied to all participants. PensionPro, CPC, TGPC
BG5150 Posted August 30, 2018 Posted August 30, 2018 Can they do non-whole dollar amounts, like $43.81 per pay period? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Karoline Curran Posted August 30, 2018 Author Posted August 30, 2018 Thanks everyone! Yes, I realize "ethics" wasn't the word--just couldn't think another one! Yes, BG5150, they can do non-whole dollar amounts. The document specifies either a percentage or dollar amount. But the financial advisor who is basically in charge of enrollments, makes everyone do a dollar amount.
chc93 Posted August 30, 2018 Posted August 30, 2018 If the plan document specifies percentage or dollar amount, I think the financial advisor is running the risk of not following the terms of the plan. What if a participant knows that he can elect a percentage (I would think the SPD says that too). If the financial advisor says "NO" to percentage, to me that is a problem. If all responsible parties agree, the plan document should be amended.
Larry Starr Posted August 30, 2018 Posted August 30, 2018 28 minutes ago, Karoline Curran said: Thanks everyone! Yes, I realize "ethics" wasn't the word--just couldn't think another one! Yes, BG5150, they can do non-whole dollar amounts. The document specifies either a percentage or dollar amount. But the financial advisor who is basically in charge of enrollments, makes everyone do a dollar amount. You clearly have identified a BIG problem. The plan is not following its terms. Participants have a court enforceable right to defer a percentage. The financial advisor is risking law suits and I guarantee HIS employer would not allow him to make that decision as he is taking on a fiduciary role. And for what? I have not seen any payroll software that does not offer a choice of dollar amount or percentage; I doubt it makes any difference to the CPA, and if it does, that's the CPAs problem! Eve Sav and ACK 2 Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com
CuseFan Posted August 30, 2018 Posted August 30, 2018 And what about employees with variable pay? Aside from inhibiting proper administration of plan terms, this is a huge disservice to plan participants to make a TPA and/or CPA's job easier. The plans are for the participants' benefit, not the providers', although it's clear they think otherwise. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
Karoline Curran Posted August 30, 2018 Author Posted August 30, 2018 9 minutes ago, Larry Starr said: You clearly have identified a BIG problem. The plan is not following its terms. Participants have a court enforceable right to defer a percentage. The financial advisor is risking law suits and I guarantee HIS employer would not allow him to make that decision as he is taking on a fiduciary role. And for what? I have not seen any payroll software that does not offer a choice of dollar amount or percentage; I doubt it makes any difference to the CPA, and if it does, that's the CPAs problem! That's what I thought, Larry, but I thought I would check. He's doing this to make things easier for the CPA, which doesn't make any sense really. As you said, I don't think it makes any difference to the CPA and so what if it did. Thanks to everyone. I will go and address it now!
Karoline Curran Posted August 30, 2018 Author Posted August 30, 2018 40 minutes ago, chc93 said: If the plan document specifies percentage or dollar amount, I think the financial advisor is running the risk of not following the terms of the plan. What if a participant knows that he can elect a percentage (I would think the SPD says that too). If the financial advisor says "NO" to percentage, to me that is a problem. If all responsible parties agree, the plan document should be amended. Yes, the SPD does say that. Thank you!
Kansas401k Posted August 31, 2018 Posted August 31, 2018 Forcing a flat dollar amount per payroll is a problem IMO. Aside from the fact that it's contrary to plan terms (which in and of itself is a problem as mentioned by others), it could cost the participants' substantial retirement dollars over the years as flat dollar won't capture salary adjustments, overtime, bonuses, or performance incentives.
Luke Bailey Posted September 1, 2018 Posted September 1, 2018 Buy the CPA a computer for Christmas. Eve Sav and imchipbrown 2 Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034
Karoline Curran Posted September 4, 2018 Author Posted September 4, 2018 On 8/31/2018 at 8:00 PM, Luke Bailey said: Buy the CPA a computer for Christmas. Hah. Good one.
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