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Compliance Corner
March 5, 2005/ (Updated as of November 11,2014)

Retirement Plan Advisor Update
The retirement plan world is constantly changing and plan sponsors can be overwhelmed by the array of compliance issues with which they are confronted. National Retirement Services is committed to providing our clients and their advisors with clear guidance on important issues as they arise.

The Current Issue: Automatic IRA Rollovers

Of critical importance to retirement plan sponsors are “Automatic IRA Rollovers.” Advisors may want to take this opportunity to be sure that their clients are: A) Aware of the impending deadlines related to this issue; and B) Working with an administrator and recordkeeper that have the ability to assist in the compliance process.

Under new rules, a distribution to an unresponsive terminated participant of more than $1,000 and not more than $5,000 must be transferred to an IRA. Historically, sponsors have simply issued checks for distributions of $5,000 or less to participants who failed to respond to distribution requests. Under the new rules, sponsors will need to execute the documentation necessary to establish the IRA account and determine how account assets are invested. While this may create an additional administrative burden, many vendors are striving to create IRA programs that will make the process as efficient as possible.

Clarification for the Plan Sponsor

Please note, that for purposes of the automatic rollover rule, participant rollovers into the plan in question are included when determining if the participant has more than $1,000, but less than $5,000.

In contrast, EGTRRA permits a plan sponsor to include or exclude participant rollovers when determining if a participant has over $5,000, and the associated prohibition against certain involuntary distributions.

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