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Long gone client of TPA is calling his attorney


kwalified
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A one participant plan started a ps and mpp plan in the mid 80's. Our company (a TPA) was engaged to prepare the documents for the plans. This is years before I took over the company. Administration (5500 EZ) was handled by his CPA. Recently his plans were audited by the IRS. He has not been making contrbutions to the MPP plan in years and his CPA failed to terminate that plan when it was no longer necessary to have two plans. So I believe the trigger to the audit was that he was filing EZ's on his MPP and reporting "0" contributions for several years. Anyway, upon review the IRS slapped him with a $25K penalty for failure to restate his plans. Ultimately they were able to negotiate that down to $4k penalty for each plan plus his CPA is charging him $1500. He is wanting my company to pay for the penalties. I nicely told him I am sorry, but I can not do that. Our files were shredded a couple of years ago and the only correspondence he has from our office is dated December 1986 when the plans were set up. I explained that ultimately he is the plan sponsor and is responsible for maintaining the tax qualified status of his plans. His CPA worked on the plan annually and did the admin and that he should approach him for relief. I have worked for my company since 1994, took over it after the death of the president in 2000 and have never done any work for this man. My employee has worked for us since 1989 and she does not recall ever doing work on the plan either. We clearly were brought in to provide document services only. Generally in the past when we only provide document services and its time for restatement, we would send out a letter to clients advising them of this and to make certain that they wanted us to still provide this service. However, with no files, I can not prove that was ever done. Personally, I don't think anything will happen, but if should I get a call from his attorney, I would just forward it to a local ERISA attorney I know.

Any thoughts on this matter?

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Tell them you have no record of them being a client since 1986.

If an attorney does come, I would probably notify by E/O insurance but I can't see anything beyond defending against a nuisance claim based on what you are saying. Who did his TRA 86 restatement, GUST & EGTRRA as well as the host of other amendments. Were none done since the plan was set up in 1986? If that's ture sounds like the guys got off cheap with the IRS.

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Tell them you have no record of them being a client since 1986.

If an attorney does come, I would probably notify by E/O insurance but I can't see anything beyond defending against a nuisance claim based on what you are saying. Who did his TRA 86 restatement, GUST & EGTRRA as well as the host of other amendments. Were none done since the plan was set up in 1986? If that's ture sounds like the guys got off cheap with the IRS.

I agree. I think he is getting off cheap. His CPA was doing his annual admin. He should have been with a TPA. I believe his CPA was reporting his MPP with zero contributions for several years which probably triggered the audit.

Thanks for the response.

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