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How many ERISA-governed plans have at least one participant’s account balance not fed to a recordkeeper’s system?


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In recent months, some BenefitsLink discussions have remarked on ERISA § 105’s command for lifetime-income illustrations. These discussions assume recordkeepers provide a service to generate the illustrations. Some discussions observe that an illustration is not routinely furnished for a self-directed brokerage account. I guess those mentions refer to a situation in which there is a securities broker-dealer’s account AND there is not an arrangement that results in a computer feed of the SDBA’s balance (not the details) to the recordkeeper’s system.

BenefitsLink neighbors, how much does this happen?

How many ERISA-governed plans have this situation?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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I see it more often in micro plans, where even going to a mutual fund/insurance co. platform might appear pricier than reasonable, and so the sponsor's advisor buddy sets everyone else in his/her own investment account through their agency.

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Bill Presson and Bri, thank you.

Are there enough plans with accounts not getting a lifetime-income illustration from another provider that a TPA should build a service (with an incremental fee) for this?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Bill Presson, thank you.

Does anyone have a different setting in which the TPA does not furnish any individual’s account statement so furnishing a lifetime-income illustration would be an added service?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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2 minutes ago, Peter Gulia said:

Bill Presson, thank you.

Does anyone have a different setting in which the TPA does not furnish any individual’s account statement so furnishing a lifetime-income illustration would be an added service?

Peter, having worked with a lot of plans like these with my former employer, I don't think that simply being able to provide the statement is an issue.  The big admin software providers have a solution for it.  The bigger issue is timing and capability top get the right data into the LII.  Many TPAs with plans like these (SDBA plans, or platforms with some SDBA's) only do an annual valuation and may get the statements from the client anywhere from January 1st to October 15.  Having the ability to provide the LII through the software and being able to get the data into the system for an accurate LII are two very distinct issues.

This is the kind of issue that makes me very happy to have moved away from the "20 different RKs and 20 different SDBA providers" type of practice.  It started getting a little iffy to me when the DOL went after brokerage windows in FAB 2012-02 (before the revised FAB after the industry outcry)

 

 

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RatherBeGolfing, thank you for helping me with information about kinds of plans I have almost no experience with.

I am glad to learn about the business challenges TPAs face.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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We used to have a number of plans that weren't on our recordkeeping system, mostly SDBAs only plans, but not anymore! The lifetime-income illustration requirement forced us to put them all on our system, and frankly, I'm happy about that.

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With so many practitioners observing that Congress's command is useless or worse than useless, it's good to see you found a silver lining.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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On 8/11/2022 at 11:28 PM, Bill Presson said:

Peter, we do it automatically as part of the participant statements that we provide. The calculations are built into our admin software, so it's not a big deal.

Yes. I'll bet you also check to make sure the right people got the right contributions; what a thought!

Ed Snyder

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