Cash Deposit Disclosures
Your American Trust Custody account has a master cash account that is used to hold balances pending utilization for various transactions.
As your custodian or directed trustee, we will hold cash pending transactions such as distributions, pending investments, trade settlements, ModelxChange® and ManagerxChange® program liquidity requirements, and other transactions at your or your authorized agent’s direction for you in a master cash account using one or more of the sub-custodial bank depositories listed below. These are generally omnibus accounts in the name of American Trust Custody for the exclusive benefit of our customers, which are sub-accounted by us at the individual account level and reported to you on your regular monthly statement, and also available for reference via secure web access on a continuous basis here.
Participating Sub-Custodial Banks
The list of banks utilized by American Trust Custody for accounts registered to natural persons (including retirement, trust, and profit sharing plans where a natural person is a beneficiary) as well as other non-natural person entities are:
- American Bank & Trust
- Axos Bank
- Banc of California
- Citizens Bank
- First Foundations
- Manufacturers Bank
- Luther Burbank Savings Bank
- PNC Bank, NA
- The Huntington National Bank
- TIAA Bank
- TriState Capital Bank
- 1st Century Bank
We may periodically add or remove banks from this list as detailed in “Terms and Conditions” at the secure website link referenced above. We earn interest income as part of our reasonable compensation on these uninvested cash balances, as more fully described below, see “Float Disclosure”.
The Department of Labor’s Field Assistance Bulletin 2002-03 requires that service providers to retirement plans, such as trust companies, banks, broker-dealers and record keepers, provide their clients with adequate information regarding the service provider’s receipt of earnings or other benefits from the use of uninvested cash (“Float”). In connection therewith, please be advised that:
- When acting as custodian or directed trustee, American Trust Custody, and/or its affiliates or agents, may retain, as part of their reasonable compensation, the Float earned on certain plan cash balances. You authorize and direct American Trust Custody and/or its affiliates or agents to receive Float as a portion of its compensation for performing services to plans. Earnings on Float arise from:
- Cash balances received due to plan contributions, other transfers, or plan asset sales/redemptions. You authorize and direct American Trust Custody to receive Float from the date it receives cash balances due to plan contributions, other transfers, or plan asset sales/redemptions, until the date American Trust Custody has received investment or distribution instructions from an authorized person or investment manager and good settlement thereof following execution of purchase orders. For the avoidance of doubt, you authorize and direct American Trust Custody to receive Float on any cash balances held in a plan account, pending instructions from you or an authorized person. American Trust Custody executes investment instructions on the same day they are received from an authorized plan fiduciary, and adequate cash is available to fund settlement thereof. In the case of contributions pending investment direction, funds are made available once they have cleared the issuing bank; this is generally the same day for wires and two days for checks;
- Cash balances held while processing 12b-1 fees, service fees and commissions (collectively “Fund Fees”). American Trust Custody collects Fund Fees as they are paid from mutual funds, which generates cash balances. Cash from Fund Fees is generally transferred to your custody or trust account on a monthly basis. You authorize and direct American Trust Custody, and/or its affiliates or agents to receive Float from the date of the receipt of Fund Fees until the date of transfer of cash to your custody or trust account;
- Cash balances held in a custody or trust account pending a plan fiduciary’s direction as to payment of plan expenses or other use. Cash transferred to a custody or trust account following American Trust Custody’s or its affiliates’ or agents’ collection of Fund Fees may be used to defray the expenses of the plan. Alternatively, this cash may be allocated to participant or beneficiary accounts. You authorize and direct American Trust Custody to receive Float from the date cash is transferred to the custody or trust account until the date American Trust Custody has received instruction as to the use of this cash and its transfer from the custody or trust account to pay plan expenses or, as the case may be, allocation to participant and beneficiary accounts and execution of purchase orders consistent with the their investment selections;
- Cash balances used to maintain adequate liquidity for ModelxChange®. American Trust Custody makes available the ModelxChange® program through which you can elect to make available a model fund managed by an investment manager or other unitized fund. Under the terms of the ModelxChange® agreement, American Trust Custody will be directed to maintain a cash balance within a set range of a liquidity target in order to fulfill redemptions from such model or unitized funds. Where, as a result of redemptions, the cash balance decreases below the relevant liquidity range, American Trust Custody will be directed to place trades to increase the cash balance to a level within the liquidity range. You authorize and direct American Trust Custody to receive Float on cash balances maintained within the model or unitized fund from the date cash is transferred, or securities are sold to generate cash, to be maintained as liquidity for the model or unitized fund, until the date the cash is used to satisfy a redemption request; and
- Benefit distribution services. Float may be earned on money set aside for payment of outstanding but un-cashed benefit distribution checks or other participant or beneficiary-based or custodial transfers. The Float period commences generally from the date on the face of the checks to participants and beneficiaries until the date that either the recipient cashes the check and it clears American Trust Custody’s accounts through the banking system, or the check is cancelled and the underlying funds are returned to the plan. Checks are generally mailed the same day as they are issued. If a check remains uncashed for a period of six months, American Trust Custody may issue a new check to the participant or beneficiary or transfer the benefit amount to a missing participant IRA, and will continue to earn Float until the time the participant beneficiary cashes the new check or the benefit amount is transferred to a missing participant IRA, as the case may be.
- The Float rate of return is based upon and approximates current short-term money market rates as in effect from time to time. In certain instances American Trust Custody or its affiliates or agents may earn bank credits in lieu of interest, and in such instances that rate is generally the then current Federal Funds rate, plus some factor. You authorize and direct American Trust Custody and its affiliates and agents to deposit cash balances in one or more of the depository institutions disclosed above. You acknowledge that the actual Float rate of return may vary based on rates offered by the specific institutions in which the cash balance is deposited.
Additional information is available upon request. Fiduciaries are referred to DOL FAB 2002-03 (available at https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2002-03)) for more information regarding Float and fiduciary considerations related thereto.