Comptroller's Handbook - Retirement Plan Services

AM-RPS Comptroller of the Currency Administrator of National Banks Retirement Plan Services Comptroller’s Handbook December 2007 AM Asset Management As of January 6, 2012, this guidance applies to federal savings associations in addition to national banks.* Retirement Plan Services Table of Contents Overview.........................................................................................................1 Background .............................................................................................................1 Types of Retirement Plan Services ...........................................................................3 Trustee Services............................................................................................ 3 Investment Management Services ................................................................. 4 Custody Services .......................................................................................... 4 Participant Recordkeeping ............................................................................ 5 Other Non-Fiduciary Services....................................................................... 5 Regulatory Framework............................................................................................ 6 Internal Revenue Code ................................................................................. 6 ERISA ........................................................................................................... 7 Fiduciary Responsibility………………………………………………………....7 Risks ..................................................................................................................... 9 Compliance Risk .......................................................................................... 9 Transaction Risk ......................................................................................... 10 Strategic Risk .............................................................................................. 11 Reputation Risk .......................................................................................... 11 Risk Management ................................................................................................. 12 Board and Management Supervision........................................................... 12 Strategic Planning............................................................................. 12 Management .................................................................................... 12 Policies............................................................................................. 13

Product and Service Development.................................................... 13 Third-Party Service Providers ............................................................ 14 Indemnification and Liability Insurance ............................................ 14 Account Acceptance................................................................................... 14 Pre-acceptance Reviews ................................................................... 15 Establishment of Accounts ................................................................ 15 Account Administration.............................................................................. 16 Account Reviews.............................................................................. 16 Co-Fiduciary Liability........................................................................ 18 Managing Prohibited Transactions .................................................... 18 Other ERISA Compliance Issues........................................................ 19 Investment Management............................................................................. 21 Prohibited Investment Management Transactions.............................. 21 Other Investment Management Risks................................................ 22 Operational Control Processes.................................................................... 24 Comptroller’s Handbook i Retirement Plan Services As of January 6, 2012, this guidance applies to federal savings associations in addition to national banks.* Monitoring Contributions for Appropriateness and Timeliness .......... 25 Processing Benefits and Withholding Taxes ...................................... 25 Processing Participant Loans............................................................. 26 Valuing Retirement Plan Assets......................................................... 27 Meeting Reporting Requirements...................................................... 28 Processing Transactions and Making Contingency Plans ................... 29 Participant Recordkeeping .......................................................................... 29 Examination Procedures......................................................................33 Quantity of Risk.......................................................................................... 36 Quality of Risk Management……………………..….………………………………….39 Conclusions………………………………….……………………………………………56 Appendix A: Types of Retirement Plans..................................59 Employee Benefit Pension Plans ................................................................. 59 Defined Benefit Pension Plans .................................................................... 61 Defined Contribution Pension Plans ........................................................... 62 Individual Retirement Accounts (IRAs)........................................................ 68 Appendix B: ERISA Definitions and Summary....................72 Selected Definitions …………………………………………………………………....73 Summary of ERISA Title 1, Part 4 – Fiduciary Responsibility ............. 76 ERISA § 401 – Coverage................................................................... 76 ERISA § 402 – Establishment of Plan................................................. 76 ERISA § 403 – Establishment of Trust................................................ 76 ERISA § 404 – Fiduciary Duties ........................................................ 76 ERISA § 405 – Liability for Breach by Co-Fiduciary........................... 77 ERISA § 406 – Prohibited Transactions ............................................. 77 ERISA § 407 – 10 Percent Limitation ................................................ 77 ERISA § 408 – Exemptions from Prohibited Transactions .................. 78 ERISA § 409 – Liability for Breach of Fiduciary Duty ........................ 78 ERISA § 410 – Exculpatory Provisions; Insurance.............................. 78 ERISA § 411 – Prohibition Against Certain Positions......................... 78 ERISA § 412 – Bonding .................................................................... 78 Retirement Plan Services ii Comptroller’s Handbook As of January 6, 2012, this guidance applies to federal savings associations in addition to national banks.* Appendix C: Prohibited Transactions .......................................79 Prohibited Transaction Exemptions............................................................. 80 Types of Prohibited Transaction Exemptions............................................... 80 Statutory Exemptions ........................................................................ 81 Prohibited Transaction Class Exemptions (PTEs).......................................... 83 Appendix D: Fee and Compensation Issues…………………..86 Receipt of 12b-1 or Administrative Fees…………………….………………………86 Soft Dollar Arrangements………………………………………………………………88 Sweep Fees…………………………………………………………...…………………..88 Fees on Own Bank Plans………………………………………...…….………………89 Float……………………………………………………………………………………......89 Appendix E: Worksheets ...................................................................91 Pension Plan Worksheet ............................................................................. 92 Employee Stock Ownership Plans (ESOP) Worksheet.................................. 97 IRA Worksheet ........................................................................................... 99 References ............................................................................................. 101 Comptroller’s Handbook iii Retirement Plan Services As of January 6, 2012, this guidance applies to...

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