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By way of illustration, here is a list of coverage and exclusions from our policy. Coverage: Miscellaneous Professional Liability (typical errors & omissions) Information Security & Privacy Liability (protection of data and privacy) Personal Injury Liability (someone gets injured) Website Media Content Liability (information presented on website) Privacy Notification Costs (remediation if breach of data privacy) Regulatory Defense and Penalties (legal representation) PCI Fines, Expenses and Costs (more data protection) Consequential Reputational Loss (loss of business from hit to reputation) Electronic Crime Endorsement (electronic funds transfers) Fraudulent Instruction Coverage (fraudulent instruction by someone outside the firm) Telecommunications Fraud Endorsement (fraud by a third party using our telecommunications services) Exclusions: War and Terrorism Exclusion Endorsement War And Civil War Exclusion Generally, any willful act of fraud or collusion on our part is not covered, and any consequences of providing incorrect or incomplete information, or a failure to provide information is covered. As sign of the times, It is striking how much greater detail there is in more recent policies related to privacy of data and to fraudulent transactions. In addition to coverage amounts, the underwriting process is influenced by business structure, number of staff, professional credentials of staff, number of clients, scope of services, data security and gross revenue. If you are talking with people looking to enter the business, inform them on business structures that best avoid exposing their personal assets to the financial risks of the business, and emphasize that E&O insurance is like health insurance, auto insurance and life insurance - you hate to pay the premiums but you will be thankful you have the insurance if when you need it.

The smart ones do. I had malpractice coverage when I owned my own TPA from 1986-1998 and our trust company that I merged into did as well. Haven't been an owner since the mid 2000's but I'm pretty sure the firms I've worked with since then have the coverage as well.

I'd go a step further than "EZ is ok to file" and say that you are required to file an EZ.

ERISA-Bubs, you do not say how long the plan has allocated revenue sharing using a formula that is contrary to the 404(c) disclosure, nor do you indicate which method was approved by the plan administrator for use by the plan. If there is documentation of an approved method and the plan actually has been using that method, then you are dealing with a miscommunication in the disclosure. Correcting the disclosure and issuing a new disclosure may be sufficient. If there is documentation of an approved method and the plan actually has not been using that method, then there is an operational issue that could have accumulated over time to be more than only pennies per at least some participants. It should not be too onerous to so look at participants within the funds that paid the most revenue sharing to see if how much of an impact using the incorrect method had on those participants. If it does have an impact, then you can consider making whole the participants who were did not get the full benefit of the revenue sharing on their investments, plus a little more to bring them up to the level of other participants who improperly received revenue sharing amounts that they should not have received. Keep in mind that if you know there is a problem and you do something reasonable to correct it, you are will be better off in the eyes of a DOL or IRS agent than if you know there is a problem and you ignore it. If the issue truly is pennies per participant, a creative fix may be as simple as skewing some of the next revenue sharing allocations to in favor of those participants who had a shortfall.

For 404a-5 disclosures to directing participants, beneficiaries, and alternate payees, the plan’s administrator is responsible for its disclosures. Whether to furnish a corrected disclosure is the plan administrator’s decision, which it should make loyally and prudently for the exclusive purpose of administering the plan and providing its benefits, incurring no more than reasonable expense. ERISA’s 404a-5 rule includes this: “A plan administrator will not be liable for the completeness and accuracy of information used to satisfy these disclosure requirements when the plan administrator reasonably and in good faith relies on information received from or provided by a plan service provider or the issuer of a designated investment alternative.” 29 C.F.R. § 2550.404a-5(b)(1) https://www.ecfr.gov/current/title-29/part-2550/section-2550.404a-5#p-2550.404a-5(b)(1). That sentence might help an administrator when the error is about something like the past 1-, 5-, and 10-year returns of “benchmark” indexes, which the administrator contracted a service provider to retrieve and put in the disclosures. And perhaps that nonliability sentence helps if the administrator relied on a service provider’s incorrect rule 408b-2 disclosure when the circumstances are such that a prudent fiduciary would not have known or suspected the disclosure is wrong. But it’s less clear whether an administrator relies in good faith on its misdescription of the plan’s allocation of plan-administration expenses when that allocation is something the administrator decided and so has in its knowledge (and records) without looking to anyone else. Even if an administrator contracts a service provider to assemble 404a-5 disclosures, shouldn’t the administrator read at least the text of the form of the disclosure document the service provider will use for the function? The consequence of a 404a-5 disclosure that is less than complete and accurate is that the administrator doesn’t get the rule’s satisfaction of the administrator’s responsibility “to ensure, consistent with section 404(a)(1)(A) and (B), that such participants and beneficiaries, on a regular and periodic basis, are made aware of their rights and responsibilities with respect to the investment of assets held in, or contributed to, their accounts and are provided sufficient information regarding the plan, including fees and expenses, and regarding designated investment alternatives, including fees and expenses attendant thereto, to make informed decisions with regard to the management of their individual accounts.” 29 C.F.R. § 2550.404a-5(a) https://www.ecfr.gov/current/title-29/part-2550/section-2550.404a-5#p-2550.404a-5(a). Not having met that responsibility might be a tolerable exposure if one expects few directing individuals will suffer harm from the incorrect disclosure, and perhaps fewer will pursue one’s claim that the fiduciary breached its responsibility and caused the individual losses that the fiduciary must make good. This is not advice to anyone.

Gilmore, you are correct about the former LTPT employee continuing to accrue vesting service using the LTPT vesting rules, i.e., needing at least 500 hours of service. I should have been more explicit in distinguishing post-LTPT eligibility versus vesting service. This is destined to become a TPA/recordkeeper's nightmare. Section 401(k)(15)(B)(iii) reads: (iii) Vesting For purposes of determining whether an employee described in clause (i) has a nonforfeitable right to employer contributions (other than contributions described in paragraph (3)(D)(i)) under the plan, each 12-month period for which the employee has at least 500 hours of service shall be treated as a year of service, and section 411(a)(6) shall be applied by substituting "at least 500 hours of service" for "more than 500 hours of service" in subparagraph (A) thereof. and Section 401(k)(15)(B)(iv) reads: (iv) Employees who become full-time employees This subparagraph (other than clause (iii)) shall cease to apply to any employee as of the first plan year beginning after the plan year in which the employee meets the requirements of paragraph (2)(D) without regard to paragraph (2)(D)(ii).

FYI, in the TE/GE regional conference on August 30th the IRS said LTPT guidance is expected to be released "towards the end of the year" but that was not guaranteed, so we in the industry and our clients are on our own for now. Gilmore, my understanding is an LTPT employee keeps any vesting years of service earned by while the employee is classified as an LTPT and these years are added to any year of vesting service earned by that employee should the employee subsequently qualify for participation under the plan's rules for eligibility and entry. Once an employee meets the plan's rules for eligibility and entry, there is no going back to LTPT status. Regarding your auto-enrollment question, my understanding we look to the plan's rules for eligibility and entry. Keep in mind, no one is auto-enrolled until they meet the eligibility and entry rules. If an LTPT employee meets these rules, they are auto-enrolled just like any other employee and they are no longer LTPT employees. If they do not meet these rules, they are not auto-enrolled. Note that several practitioners have suggested adopting eligibility and entry rules that are sufficiently liberal so that all employees will become eligible under the plan's rules before they would be considered LTPT employees. Essentially, the plan by design would have no LTPT employees. It will be interesting to see what guidance we get for different atypical situations like: Application of LTPT rules of parity to LTPT vesting service accruals (where a break in service is a year with less than 500 hours) A terminated employee's eligibility service is wiped out by the rules of parity, and that employee is subsequently rehired. A terminated employee's vesting service is wiped out by the rules of parity after a total lump sum distribution, and that employee is subsequently rehired. Upon rehire an employee with a break in service must satisfy the eligibility requirements before re-entering the plan retroactively. An employee is in an excluded classification (other than bargaining or NRA): Does LTPT classification supersede other exclusions by classification? What if the employee met the plan eligibility requirements but was excluded by the classification, and then the employee became part-time and subsequently changed to a covered classification? Will a non-service-related classification be allowed? It also will be interesting to see what guidance is provided for any required plan language addressing LTPT employees. It would seem to make sense that there would be some definition of LTPT status and eligibility to make deferrals. Hopefully, there can be a simple way in a single section to list out all of the available exclusions/inclusions of LTPT employees from coverage, nondiscrimination testing, top heavy, match eligibility, non-elective employer contribution eligibility. Oh, the anticipation!

The answers ultimately distill down to a discussion of what boundaries, if any, exist between co-fiduciaries. In both the PPP and the 3(16) administrator scenarios, the plan sponsor and the service providers are distinct, unrelated entities which suggests that the terms of the service agreement will play a crucial role in resolving the situation. In both scenarios, it is very likely that the employer controls payroll, and payroll will follow the instruction of the employer. Payroll is the entity that will calculate the amount of a deferral that should be funded to the plan. The PPP is the PEP plan sponsor and the PPP trustee or other fiduciary designated by the PPP (thanks SECURE 2.0) is responsible for collecting contributions due to the plan. In this scenario, if the PPP determines that there is an LTPT that should be included and the employer disagrees and refuses to instruct payroll to take the deferral, then the PPP should start the multi-step process to rid the plan of the "bad apple". The 3(16) administrator likely does not possess same level of authority over the plan as the PPP has. The 3(16) administrator could look to the service agreement to see if the administrator was delegated the authority to determine eligibility. If not, the administrator's choices are in that range between resigning or trying to generate enough documentation to try to show they were just following the instructions of the employer. If the administrator was delegated the authority to determine eligibility, then they should have an obligation to pursue getting the employer to respect the delegation of authority to the administrator. If the employer refuses, it sets up a conflict between co-fiduciaries. As always with conflicts between an employer and service provider, it is easier to say what should or could be done versus real-life decisions about business relationships and ethics.

and here it is (in part):