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In small plans / sponsors, I want as few accounts as possible attributable to participants who are not active employees. It is just one more opportunity to miss a notice or disclosure or for the participant to go "missing".

You lost me right here

Thanks ESOP guy, sounds like your experience is in-line with what I thought was common. The distribution question is one that came up already, but I don't have an answer to as to how involved they are in that process. Could someone correct me if I'm wrong, but I thought part of the audit process was to look at the plan's processes and procedures, including those of the service providers, hence the need for a SAS70 or processes/procedures questionnaire in lieu of a SAS70. In this circumstance, wouldn't the CPA be auditing its own firm's practices as they relate to services on the retirement plan? The CPA firm is a good sized local company, not tiny, but even if there is clear delineation between departments, I don't see how that makes it independent under the DOL rules. There would be a huge chance for bias, and inadvertent partiality, no? Am I misunderstanding the processes/procedures portion of the audit? Maybe the SAS70/questionnaire doesn't actually do much good? I am probably beating a dead horse.

I am doing this from memory not recent research. I am a CPA and I once worked for a regional CPA firm that had a TPA business and a rather good size plan audit business. We NEVER did TPA services for a plan that was audited EXCEPT prepare the Form 5500 and 8955-SSA. This firm was sticklers about compliance but more then happy to earn more if it could. My understanding was it was an independence issue is why the two didn't overlap more. Not sure if it was AICPA ethics or DOL rules. But it shouldn't matter either one should stop a CPA firm as an AICPA ethics violation often times is by definition a violation of related state law. I don't know how they can both audit distributions which is part of every plan audit I have seen and help process them.