Plan Administrators

[GBurns]

It seems that nearly all Plan Documents state that the Employer is the Plan Sponsor and is the Plan Administrator, whereas the Claims Administrator, the TPA, is regarded as being a service provider.

Can anyone explain why this is done? Any cites and links to explanations would also be helpful because I need to not only explain and show that this is standard practice but also give the Why?.

[SLuskin]

George, I had asked our attorney the same question in1995, and found his letter with the answer. Although there are no cites, he says, "My experience is that a 'plan administrator' for ERISA purposes is almost always either the employer or a key employee or owner of the employer. My belief is that the employer is the most appropriate person to bear this responsibility. Many people confuse a 'plan administrator' in the ERISA sense with a third party which administers the plan. Normally when there is a tpa, the responsibilities of the tpa to the employer and the plan will be specified in a written agreement." It doesn't seem to say much except that the tpa is better protected not being the plan administrator.

With the new privacy regs, especially the part that says that the employee can look at his claim file in the office of the plan administrator, we certainly don't want participants having the right to come here. We have started shipping old claim files back to the "plan administrator" for that reason.