Tom Posted May 17 Share Posted May 17 Employer contribution for 2022 of about $9,000 was paid in Sept 2023 in time for tax deduction purposes. The plan is a dreaded separate brokerage account for each person, granted a small plan. Despite us providing the participant allocation of the money to the broker (more than once - the brokerage firm had personnel changes) they did not implement the allocation so the funds sat in an unallocated account until just now. The broker is asking about makeup earnings. While that seems to be the right thing to do, I'm not certain it is required. It is likely a fiduciary issue. It's just another thing to do, explain to the client, he will ask who should pay (I'm guessing it could be $1,000), and it won't be us but we'll have to go round and round and take a lot of time and we will want to bill for the time. I'd like to ignore it. Thoughts? Link to comment Share on other sites More sharing options...
Peter Gulia Posted May 17 Share Posted May 17 If the plan provides participant-directed investment regarding that contribution: Might not following a participant’s investment direction be a breach of the fiduciary’s ERISA § 404(a)(1)(D) duty of obedience to the plan’s governing documents? Might not following a participant’s investment direction be a tax-qualification defect of not administering the plan according to the written plan? If the securities broker-dealer or a custodian associated with it had the money and the instructions and had an obligation to allocate the contribution among participants’ accounts, should it be the broker-dealer that ought to restore participants’ accounts at the broker-dealer’s expense? Luke Bailey and CuseFan 2 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
Luke Bailey Posted May 17 Share Posted May 17 Tom, ignoring it might work, but then again months from now a participant, or all the participants, could make a claim along the lines that Peter Gulia explains above. If liability for the amount is clear and it's not you, risk mitigation might suggest striking while iron is hot. CuseFan 1 Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
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