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Distinction Between TPA and Plan Administrator


thepensionmaven
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One of our clients is going through a divorce, and I had recommended a QDRO be drafted by a local firm. The QDRO was drafted and sent to us for review. The QDRO had my firm as the Plan Administrator. I called the preparer and asked them to correctly enumerate the Plan Administrator as the Employer. I was sent a new draft and will still down as the Plan Administrator and had them redo.

This was the last I heard of the issue, until last Friday when we were served with the QDRO papers as filed in the court. Needless to say, my firm had been incorrectly listed as the Plan Administrator. Upon receipt, I called the opposing attorney as well as the QDRO preparer.

It appears as though the investment broker is related to the wife, and he is not knowledgeable on pension matters and he is the one who told the parties that we are the Plan Administrator.

Has anyone else run into a similar circumstance and how was this handled.

Having been a pension professional for over 30 years, I am finding it more difficult to deal with incompetent people.

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I am finding it more difficult to deal with incompetent people.

Certainly takes the fun out of it, doesn't it? but it gives us good stories.

For the DRO, I'd return it to the court with the notice that it is not qualified, because it doesn't list the employer as the Plan Administrator, and let the lawyers 'splain it to the judge.

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Listing the plan administrator correctly is not a requirement for qualification. If you want to punish someone for not paying attention to you, I suppose the adminstrator could disqualifiy the order, but the better practice is to disregard matters that are not important. You might findthe plan administrator 'splainin' to the judge why attorney's fees should not be imposed on the administrator for an improper disqualification. You will just create more work for everyone in any event. Who is paying for that in time or otherwise. If you are obsesed with sweating the small stuff, let's have a discussion aobut how bad a practice it is to namen the emplopyer as plan adminsitrator of a retirement plan. That has much more important implications.

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Isn't employer = plan administrator standard practice? Isn't it impossilbe in any event for the employer to pass off all fiduciary obligations to others (especially since all others designated as fiduciaries serve at the sponsor's pleasure)?

Always check with your actuary first!

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There is an argument (in the end) that "Plan Administrator" is an interpretation issue. You see, "Plan Administrator and plan administrator" are two separate things. Plan Administrator is defined by ERISA while a plan administrator is simply someone (may be a TPA) who administers the plan. I would not expect attorneys and judges without a background in ERISA to be knowledgeable on the difference.

With this thought; I with QDROphile on this one. Given the likelihood that the attorneys and courts used 'plain language' instead of ERISA to assign meaning to the term plan administrator shouldn't be a major show-stopper. If anything is ever challenged, it is certainly not going to be based on who the plan administrator is; and we do have precedent on that one. The precedent is (and let's all say it together): A person's fiduciary status is not determined from a label, but their actions. So, you can call a TPA a "Plan Administrator" all you want, but that alone would not make them a fiduciary under the plan. This further reinforces my alignment with QDROphile on this one.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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The Plan Administrator (capital letters) has been identified in the Plan as the Plan Sponsor.

Therefore, the TPA (or plan administrator as you call it - with small letters) is not the Plan Administrator, and I do agree with GMK that the DRO be returned.

I do not believe this is a question of semantics.

I'm a TPA, I pass myself off as a TPA; if I pass myself off as an attorney, I get sued.

Seems like it is more a discussion of what is right and what is wrong.

It appears to be wrong to refer to a plan administrator (small letters) as a Plan Administrator (capital letters) if that is not de facto the case.

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With respect to the qualification of the domestic relations order, it is a discussion of what is right and wrong and a discussion of what is practical and what is not. It is so impractical to disqualify for the reason you suggest that it is wrong legally as well. A very recent court case likened the qualificatiion process as going through a checklist. I think it was an oversimplification, but the court made the point that if all items for qualification were properly in the order and no items in the order were forbidden by the applicable rules, the plan administrator should determine the order to be qualified. Can you point to anything in section 414(p) that suggests that if the order does not specify the name of the plan administrator correctly that it fails to qualify?

I am sorry to say that because the other players are ignorant and the court does not care, you will probably get away with disqualification and another order will have to be issued, causing additional delay and expense.

By the way, since you are neither a lawyer nor a fiduciary, how is it that you are determining or advising about whether or not a domestic relations order is qualified?

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