Investment structure change - protected benefit or not?

A physician group merged some years ago and because they worked with different investment advisors, the plan investment options provided for individual brokerage accounts (since accounts from other plans merged in) along with a major 401(k) record keeping product.  As years passed, and the group became very large the decision was made to require all accounts to be under one record keeping umbrella.  This was to facilitate one payroll file feed to the record keeper, elimination of lots of separate payments to brokage accounts,  reconciling all these accounts vs. consolidated reporting, etc.  

This record keeper provides for a Schwab brokerage account option so almost all brokerage accounts (all existing Schwab) were able to transfer in kind very smoothly.  However, there is one brokerage account with a brokerage firm that cannot transfer in-kind to a Schwab account as this brokerage firm be a paid advisor on an account that is not custodied with them.  Instead the account would need to be liquidated and wired to Schwab.  The physician involved is balking perhaps with the backing of the advisor.  The comment was made regarding potential losses on some interest bearing securities that come due in the next year or two.

We are wondering what options the Trustees of the plan (a group of the owners) have.  I believe investment options/features are not a protected benefit under 411(d).  I suppose they could accommodate this one remaining account in some way - move all funds but those interest bearing securities until they mature.  Or as Trustees, they could force the account to be liquidated and transferred.  They would not want to run afoul of any potential fiduciary issues.

Primarily I want to confirm that investment options under a plan such as wide-open-use-any-custodian-you-want brokerage account option is not a protected benefit.

Thank you

Tom

It is not protected. It is a feature ("F") subject to BRF nondiscrimination. The question is whether that can be considered the same feature as the Schwab brokerage window. If not, that alone creates a BRF problem and that could be the issue upon which trustees force the transfer.

Does the plan have in-service and in-kind distribution options which this person could utilize to roll out to an IRA and maintain his broker relationship?

It is not protected.

We went through the same scenario with a physician group with brokerage accounts spread across a dozen brokerage firms and following a merger into the practice of another physician group that used different brokerage accounts.  There was a Committee that was the designated Plan Administrator and Trustees that presented the idea to discontinue SDBAs to the Board (which basically was all of the physicians).  The Board adopted a resolution to eliminate the SDBAs.

We communicated with each physician with an SDBA about the transition process and set a hard deadline (4 months away) by which time all accounts had to be transferred into the plan's investment menu.  The deadline allowed time for individual's to unwind any investments or trading schemes (for example, one individual was trading covered calls).  A couple of individuals had some favorite assets and were eligible to withdraw their accounts, and so they arranged to move those assets out of the plan.

It was tedious, but mission accomplished.