Unregulated institution

Hello, this is my first post and my question I would like to pose is this:

Currently in our area, we only have 2 firms that we are able to choose from to provide a 401k. One is a A) SEC-registered firm that is not as established, and the other is B), a non-SEC registered firm (it used to be but decided not to) and have over 100 million in assets.  

I feel very uncomfortable going with the non-SEC registered firm because the SEC website shows they are nonexempt. (They claim they are not required to be since they are trust company that falls under the definition of bank.)  However the other decision makers don't see it as a significant issue. What am I missing here? It seems clear cut at least on this stance but they are willing to take the liability.  

5 hours ago, sunnyj said:

Hello, this is my first post and my question I would like to pose is this:

Currently in our area, we only have 2 firms that we are able to choose from to provide a 401k. One is a A) SEC-registered firm that is not as established, and the other is B), a non-SEC registered firm (it used to be but decided not to) and have over 100 million in assets.  

I feel very uncomfortable going with the non-SEC registered firm because the SEC website shows they are nonexempt. (They claim they are not required to be since they are trust company that falls under the definition of bank.)  However the other decision makers don't see it as a significant issue. What am I missing here? It seems clear cut at least on this stance but they are willing to take the liability.  

Your question has a basis that makes no sense to most of us.  You  never have just two choices to provide a 401(k).  I think your understanding of how this all works is probably in need of some additional education.  Financial firms provide INVESTMENTS, and you have hundreds of choices of investment firms.  The plan design/documents can be provided by consulting/administration firms (like mine) that actually helps you set up the plan and then you can go anywhere you want for the investments.  I suggest you might want to find an administrative firm that you can discuss this with.  If you wish, send me your information to larrystarr@qpc-inc.com and I will try to help you find a firm in your area that you can at least speak with. You certainly do not have just TWO choices.

As to your specific questions, those are, frankly, trivial issues.  SEC registration does not give you any real benefit.  If a firm is required to be registered and isn't, then that's a problem, but that's not what you describe here.  If the other firm is a trust company, they are regulated but under different authorities.

Larry is correct.  You can get your 401(k) document from any number of firms across the nation.  You can get it from an investment firm or mutual fund house.  You could find a Third Party Administrator (TPA) firm that specializes in 401(k)s to help you.  You might even find in your area a CPA firm that does administration and has a document that it offers people. 

There is even a vendor section on this website that has the names of a few 401(k) TPA firms.  

You have a ton of choices.   

If you are talking about helping with the investments you have a ton of choices there also.  Any mutual fund house, local bank or broker has a way to help you. 

If you want daily values and the ability to call or use the internet to do 401(k) activity there are TPAs that work with the large insurance companies and mutual funds that will help you do that. 

I agree with Larry I would find a subject matter expert in a CPA firm or TPA firm to help guide you through all the choices you actually have.  

Thank you for both your replies. I realize this may not be the best place to seek guidance as I am located in a US territory. Larry was able to direct me to a good lawyer should I try to pursue this further. 

Which territory? Possibly Puerto Rico or US Virgin Islands?

See if you can satisfy yourself that there is sufficient regulatory supervision of trust companies in your territory. They are typically subject to greater regulation than broker-dealers. Note that there are no adequate protections against fraud, other than the size of the institution.

4 hours ago, CuseFan said:

Which territory? Possibly Puerto Rico or US Virgin Islands?

It was Guam; we had several emails to discuss options.