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457(B) Change Of Plan Trustee

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My daughter's school district choose to change the trustee for their 403 & 457 plans, effective August, 2011. Since that time her contributions have been flowing to the new trustee, but the funds held by the previous trustee have yet to be rolled-over to the new trustee.

 

In visiting with the new trustee about the situation I was told that the former trustee has not released the funds as there is a close-out fee that was in the district's contract with the old trustee and thus far, the district has chosen not to pay the fee (I've been told it's 5% of the total assets) for they apparently do not have the funds. Truth be told, they probably were unaware of this when they changed trustees and had already contracted with/made deposits with the new trustee and now cannot afford what may be a 6+ figure fee for the total assets under management.

 

In the meantime, the contract with the previously trustee has a fee that can be levied against an individual's account funds after 12 months of inactivity. Also, according to the terms, unless my daughter quits working for the district, she can't roll-over the funds to say, an IRA. Here we are approaching the end of April and it appears they are at a stalemate... Looks like some mgr at the school district entered into a new contract agreement with their eyes wide-shut, in terms of their current trustee contract, and now there is this issue.

 

Is there anything in government regulations/etc. that place a time limit as to how much time is allowed for a school district to complete the transfer of funds from an old to a new trustee??

 

Note: if this were a business and some one made this sort of mistake, they'd probably fire the manager and apply the salary to pay/offset the fee....but then, I'm not sure a business would enter into such an agreement....

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Is the plan a employer paid plan? Does the Employer or the Employee make the contributions?

Who was trustee and who is now the trustee?

 

I am a TPA for 403b and 457 plans and I would like to offer my help.

 

I am not a salesman !!!!!

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As near as I can determine the employer pays the trustee fees. Only the employee contributes (in lieu of FICA). I was told in somewhat confidence when I visited with the district's new trustee that as they understand it, the prior trustee won't release/transfer the prior years contributions until the district pays some sort of plan termination/transfer fee.

 

I don't think it would be appropriate for me to disclose the prior/new trustees on a public forum. Is there a way to send me a private msg that I might share that info privately?

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Guest Joel L. Frank

As near as I can determine the employer pays the trustee fees. Only the employee contributes (in lieu of FICA). I was told in somewhat confidence when I visited with the district's new trustee that as they understand it, the prior trustee won't release/transfer the prior years contributions until the district pays some sort of plan termination/transfer fee.

 

I don't think it would be appropriate for me to disclose the prior/new trustees on a public forum. Is there a way to send me a private msg that I might share that info privately?

 

 

Public School District 403(b) Plans do not require a Trust. A Trust is the requirement of governmental 457(b) plans. I assume the 457(b) Plan is being used in lieu of FICA contributions. Is my understanding correct?

 

It seems to me that the old Trustee has a fiduciary duty to release the monies. Once that is done he/she can always resort to arbitration/mediation/conciliation or the Courts to recover any legitimate fee.

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The school district utilizes the same provider for overall management of both 457(b) and 403(b) programs. They have changed this provider, effective Aug 1st, 2011.

 

Specifically I'm speaking of the 457(b) plan and the prior trustee/management group whom has not transfered the existing funds to the new trustee/management. I'm looking for some sort of Gov. guideline/regulation/etc. whereby they have a limited window by which they have to transfer the funds, regardless of any sort of contract dispute. I suspect very few of the many affected employees are aware of this situation.

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