My gut tells me this is a bad idea(that it to have anyone in our office talk to
former or current plan participants othet than trustees or sponsor.
Is there anything besides a gut feeling someone can say as to why not to do this?
Does it turn us into fiduciaries?
ty
Full Version: tpa/client communication
Just a couple of thoughts to get things going.
Who will you bill for the time? If communcation with participants etc. is not in your service agreement then your client, the business owner, could refuse to pay you for the time.
Worse, if an employee uses your words against the owner, there might be some unpleasantness, assuming again the permissions are not in your service agreement.
Projecting the worst case scenario, are you staffed to handle the potential call volume?
We rarely and very cautiously speak with employees, but only after it has been cleared with our client.
Good luck.
Who will you bill for the time? If communcation with participants etc. is not in your service agreement then your client, the business owner, could refuse to pay you for the time.
Worse, if an employee uses your words against the owner, there might be some unpleasantness, assuming again the permissions are not in your service agreement.
Projecting the worst case scenario, are you staffed to handle the potential call volume?
We rarely and very cautiously speak with employees, but only after it has been cleared with our client.
Good luck.
QUOTE (lip @ Apr 11 2008, 11:44 AM) 
Is there anything besides a gut feeling someone can say as to why not to do this?
Does it turn us into fiduciaries?
ty
Does it turn us into fiduciaries?
ty
Some clients like to have a third party available to provide information. So, when we sign up a new client, we give them the option to authorize us to talk with participants (billable). We have a separate engagement for this. It explains that such contact is not part of our normal services and points out that while most participant contact is about routine matters (distributions, loans vesting, divorce), we do have a conflict of interest as we work for the plan sponsor, a participant is a potential adversary, and that information obtained by the participant from us could be used against the employer. To minimize this risk, we tell them we will provide only:
1. Information already contained in the Summary Plan Description; including information on how to request plan documents, submit benefit claims and employee rights under ERISA;
2. Confirmation of account balance and vesting, based on information in our files;
3. Copy of the most recent Summary Annual Report;
4. Information regarding a Plan's Participant Loan Program and maximum loan available to a Participant;
5. Information regarding the Plan's distribution procedures and anticipated payment date to a Participant eligible for a distribution; and
6. Review tax and rollover information as contained in the IRS Safe Harbor Tax Notice for Plan Participants.
We go on to state what we will not discuss or provide:
1. Timing of Employer contribution deposits to the Plan, including timeliness of 401(k) deferral contributions;
2. We will not provide information to third parties, such as attorneys, alternate payees or beneficiaries without explicit written authorization from the Plan Sponsor, or as compelled by court order;
3. Specific tax or other financial advice to Participants regarding their situation;
4. Extensive discussion regarding the workings of the Plan, such as contribution allocation methods, etc.; and
5. Any request for written documentation by a Participant will be relayed back to the Plan Sponsor for fulfillment. Copies of documents may be requested the Plan Sponsor at an additional fee.
FYI, most clients choose not to authorize us to speak with participants. Even so, having this separate engagement serves a purpose as it sets the expectation up front, rather than dealing with it later when an employer tells an employee to call us for plan info.
Good response. And the employer has to pay, although we build a expected time into our annual flat fee billing amount and only invoice excess over the time prepaid. For small plans we allot 1.5 hours as included in the base fee.
QUOTE (Jim Norman @ Apr 11 2008, 09:15 PM)
QUOTE (lip @ Apr 11 2008, 11:44 AM)
Is there anything besides a gut feeling someone can say as to why not to do this?
Does it turn us into fiduciaries?
ty
Does it turn us into fiduciaries?
ty
Some clients like to have a third party available to provide information. So, when we sign up a new client, we give them the option to authorize us to talk with participants (billable). We have a separate engagement for this. It explains that such contact is not part of our normal services and points out that while most participant contact is about routine matters (distributions, loans vesting, divorce), we do have a conflict of interest as we work for the plan sponsor, a participant is a potential adversary, and that information obtained by the participant from us could be used against the employer. To minimize this risk, we tell them we will provide only:
1. Information already contained in the Summary Plan Description; including information on how to request plan documents, submit benefit claims and employee rights under ERISA;
2. Confirmation of account balance and vesting, based on information in our files;
3. Copy of the most recent Summary Annual Report;
4. Information regarding a Plan's Participant Loan Program and maximum loan available to a Participant;
5. Information regarding the Plan's distribution procedures and anticipated payment date to a Participant eligible for a distribution; and
6. Review tax and rollover information as contained in the IRS Safe Harbor Tax Notice for Plan Participants.
We go on to state what we will not discuss or provide:
1. Timing of Employer contribution deposits to the Plan, including timeliness of 401(k) deferral contributions;
2. We will not provide information to third parties, such as attorneys, alternate payees or beneficiaries without explicit written authorization from the Plan Sponsor, or as compelled by court order;
3. Specific tax or other financial advice to Participants regarding their situation;
4. Extensive discussion regarding the workings of the Plan, such as contribution allocation methods, etc.; and
5. Any request for written documentation by a Participant will be relayed back to the Plan Sponsor for fulfillment. Copies of documents may be requested the Plan Sponsor at an additional fee.
FYI, most clients choose not to authorize us to speak with participants. Even so, having this separate engagement serves a purpose as it sets the expectation up front, rather than dealing with it later when an employer tells an employee to call us for plan info.
Stan
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