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TPAs responsibility to maintain excecuted documents


JAY21
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Just curious as to what other TPA firms out there do as far as following-up and maintaing executed (signed) documents both initial plan documents and amendments/restatements.

We have a hard time getting signed copies back on a lot of clients and spend a lot of time following up with them, but I'm wondering if this is needed. Doesn't the plan sponsor have the legal reponsibility to maintain (store) the executed documents.

I'd appreciate hearing what other TPAs do on this and whether you state the responsiblity in your service agreements or in some other written form. Thanks in advance.

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It seems likely that a service agreement could state that the TPA will maintain copies of documents.

It seems unlikely that such an agreement could relieve the sponsor of its ERISA responsibility to maintain documents.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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It seems likely that a service agreement could state that the TPA will maintain copies of documents.

It seems unlikely that such an agreement could relieve the sponsor of its ERISA responsibility to maintain documents.

Agreed. But if the service agreement requires the TPA to maintain copies of the document, there could be liability on the part of both the TPA and plan sponsor.

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I see three separate issues.

1. To run a successful record keeping business and produce accurate valuations and reports, it is necessary to have complete copies of the most current plan documents and to receive any updates and amendments to those documents. It is a benefit, but not a requirement to have signed copies of the documents.

2. If the TPA produces the plan documents for the client then I think it would be prudent to make sure the client timely executes the documents and provides a signed copy of each.

3. The ultimate responsibility for keeping copies of all plan documents is the plan sponsor's. If the IRS or DOL audits the plan, they will ask the plan sponsor for the documents. If the TPA's service agreement provides for the TPA to keep original copies of all the documents, then the TPA is responsible, otherwise, the plan sponsor is always responsible.

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  • 3 weeks later...

We struggle with this as well. It seems that for every restatement/compliance amendment requirement, we have a few clients who never return executed signature pages.

Although it ultimately may be the plan sponsor's responsibility to maintain copies of everything, we see it as our responsibility. We provide the document/amendment, follow up with a phone call then follow up with an email. We think the email is important as we can prove to the client that we reminded them. Then they are on the hook for any expenses related to a non-amender filing if they did not execute timely.

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I am paranoid enough that I want signed copies. I like the way this makes me look when I can hand an auditor (IRS or DOL) a nice complete package.

I follow up until I get the signed copies....and I start charging for the third and following requests.

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Guest Sieve

I agree with Dougsbpc & those who treat it as the service provider's responsibility. While it certainly ought to be the employer's responsibility to retain a signed copy, they all expect that that kind of administrative obligation is what they are paying the TPA or attorney or actuary for--many do not even keep a copy after sending the original back to the service provider.

To us, a timely amendment/restatement may be important, but, frankly, as service providers we are the ones who are supposed to understand the urgency, and the employer often does not understand--or care--or even read our letters. They pay us to take care of those things--service agreement be damned.

So, for me, who has the legal obligation and who can point the most fingers is all immaterial--it's the provider's responsibility.

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We send out documents for signatures with "sign here flags", requesting copy of signed pages. We then make a follow up call to see if client will attend to actions needed while we are on phone. Another call will be made. An email or two. A quick reminder letter. Then, every year we will bring this up when we issue our annual report. Beyond that... ???? :blink:

As a service provider we go to great length to help the Plan Sponsor "behave" as needed for compliance. However, beyond what we already do, what else is possible? Put a gun to the Sponsor's head and say sign or else? Sure. :huh:

IMHO, the service provider is responsible to discharge reasonable efforts to get client to sign documents, maintain on and off-site copies, and return executed copies for our files. Having the service provider be "totally responsible" is not realistic, and is not fair. At some point the Plan Sponsor needs to be held to account for actions, or lack thereof. (Perhaps that is why the regulations hold the Plan Sponsor responsible.) I will take responsility for my actions, BUT I will not take responsibility for someone else who is not totally under my control. To think otherwise is arrogant (my powers are universal) and silly (my powers rival superman's). Nope, I will just do the best I can, with documentation to prove that. :lol:

Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing?

ERPA, QPA, QKA

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At some point, the Plan Sponsor needs to be held to account for actions, or lack thereof. (Perhaps that is why the regulations hold the Plan Sponsor responsible.)

The regulations hold the sponsor responsible because the statute does.

The TPA (or any other vendor) is responsible to the sponsor, not to the IRS/EBSA/PBGC, etc.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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That was my point. A TPA needs to provide a good solid service. We can't be responsible for everything since the plan sponsor does need to do some things. Included would be execution of documents and maintaining necessary records. TPA's can only go so far, we can't be responsible for making a plan sponsor do the "right thing". We can only "guide" the client. I believe that current statutes recognizes that a TPA does not have total authority, so total responsibility is not possible.

Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing?

ERPA, QPA, QKA

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We won't do valuations until we get copies of properly signed and executed documents and/or amendments. If they send us the originals, we make a copy for us, and send back the originals. I can't imagine doing administration without access to a complete set of documents.

Yes, this causes some headaches when trying to get them returned by some clients, but ultimately less of a headache than those caused by NOT having copies.

I like Jim's idea of charging after "X" number of followups, although our current service agreement doesn't directly allow for it.

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We just had a case where we sent the EGTRRA restatement in March, followed up with a reminder phone call in early April, then sent an email around April 15 reminding them again. The client sent us the signature pages dated after April 30. When we mentioned the consequences and the related fees, they had a sudden case of amnesia and wanted us to pay. That is until we forwarded the reminder email that was sent.

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  • 1 month later...

I agree w/ below ground above. My Firm's policy is continuous follow up (I have some clients for whom I've requested the signed EGTRRA docs more than 30X eg I don't give up). However, every prototype doc / amendment I send to a client is accompanied by a letter that states that execution and legal review is the responsibility of the Plan Sponsor. I maintain a "copy" not the original. My services agreements state that the client is fully responsible for maintaining the original fully executed signed copy. I will not provide any services w/o the signed agreement. My annual transmittal letter (info letter that accompanies the 5500 and compliance testing report) has a section devoted to "known missing signatures" (eg those where I have not rec'd my signed copy). Does the TPA really want to be on the hook for penalties on audit? I sure don't. I give the client every opportunity to get it right w/ a huge amount of pestering and follow up. I don't see why the TPA would want to or should take on that liability. Does your malpractice coverage cover that when a governmental fine is levied?

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