platform plus individual brokerage accounts

[Pixie]

I have a client that would like to offer individual brokerage accounts (as an alternative to investing in a platform) for accounts over a certain threshold of assets (let's say $50,000+).  Is this discriminatory?

[Bri]

I suppose that depends on your coverage ratios of NHCEs/HCEs with the availability to access the feature.

[Peter Gulia]

If the plan provides participant-directed investment for all participants:

Why does the plan sponsor not want brokerage accounts available, as a participant-directed choice, for all participants?

[Paul I]

A form of this question was posed in the ASPPA 2002 Annual Conference - IRS Questions and Answers question 5:

5. If a 401(k) Profit Sharing Plan uses an individual funding vehicle with a $2,000 threshold and the business owners are able to immediately move into this funding vehicle that had multiple investment options, but non-owners with smaller 401(k) contributions are in a pooled money market until they reach the $2000 threshold, is this discriminatory? What if the threshold is $10,000? $25,000? $100,000?

This is a benefits, rights and features issue and, depending on the facts, could either pass or fail.

Also note that SDBAs got a lot of attention in EBSA's Field Assistance Bulletin No. 2012-02R, not about a dollar threshold, but about all of the disclosures that must be provided to all plan participants about SBDAs as an investment option.

[Peter Gulia]

Here’s the EBSA interpretation Paul I mentions; see Q&A-14 [page 10]:

https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2012-02r.pdf.