May Plan Administrator Bind the Plan?

[Guest Mrilaomt]

What is your take on the Plan Administrator being able to sign a contract that will ultimately bind the plan? For instance, if there is one plan with cafeteria and ERISA features that uses a TPA to adminster the health FSA and open enrollment for the health insurance features. However, in the TPA contract, the TPA wants (1) the employer/plan sponsor to sign the contract to be responsible to pay the fees for services, and (2) wants the plan adminstrator to also sign regarding turning over information necessary for the TPA to perform its functions. Any issues or concerns?

Plan is not funded and has health FSA and insurance benefits.

I'm just wondering what others think about this.

[GBurns]

How else could do you think this could be done?

The employer/plan sponsor is the one responsible for paying the fees for service and the one with the checkbook. Who else has the ability to pay the fees?

Who else but the Plan Administrator has the info? Other than the person who has the info, who else would be able to turn it over? Who should be held responsible for turning the info over in a timely manner?

[Guest Mrilaomt]

That was what I told the CFO - but the CFO keeps arguing that the employer sponsors the plan and gives the plan the information in the first place so only the plan sponsor should sign the contract. I came back with the argument that the plan is a separate entity from the employer (which is especially true in the HIPAA context) that can be sued, etc. The CFO argued back that if the plan is paid for by the employer (service fees and employer contriubtion - he ignored the FSA issues) - and there is no trust that the separate entity reasoning does not apply. And . . . the CFO added that if the plan was sued that the employer would be at risk for any amounts because there was not a trust and the employer would probably pick up the plan's defense. Am I thinking about this the wrong way?

[QDROphile]

Depends on how the plan was designed and who was given authority to do what. Who does what should be in the plan document, although it might be in ancillary documentation. The assigment of powers and responsibilities should be given careful consideration because of all the points mentioned.

[Guest Mrilaomt]

Thank you both so much! I truly appreciate your comments.