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9
Connecticut CPA
g
November/December 2014
paid advertisement
Plan Participants. The former is
mandated by ERISA.
All individuals "who handle funds
or other property" of a retirement
plan must be bonded. Plan spon-
sors should consider obtaining a
bond which automatically covers
all required individuals by defini-
tion (instead of by name).
Make sure the bond either precisely
names the Plan, or covers by defi-
nition all Plans of the Plan sponsor.
Make sure the bond qualifies as
an "ERISA fidelity bond;" among
other requirements, there cannot
be a deductible on an ERISA fidel-
ity bond.
Second, Some Definitions
Qualifying Plan Assets
Qualifying Plan Assets include:
Any investment held by a "Regu-
lated Financial Institution" (e.g.,
banks, insurance companies);
Investments
in mutual
funds and
insurance
contracts;
Qualifying
Employer
securities;
Participant
Loans and
contributions
receivable.
Fortunately, this enumeration
covers the vast majority of invest-
ments held in retirement plans. These
investments receive special treatment
in the SPAW rules described below.
Examples of investments that would
not be considered Qualifying Plan As-
sets are real estate, mortgages, and
collectibles.
As these non-Qualifying Plan Assets
cause the DOL the most concern, the
SPAW rules impose substantial re-
quirements on such investments.
Custodian vs. Recordkeeper
When determining compliance with the
SPAW, it is critical to ascertain whether
or not the recordkeeping and custo-
dial functions are performed by the
same entity. The custodian is the en-
tity that is holding the investments and
accounting for the Plan's holdings at
the Plan level. The recordkeeeper per-
forms the participant level account-
u