TPA ethical question

[Santo Gold]

I already know the answer to this question, but wanted to see how others felt. A two life 401k plan was adopted in 2004. Plan covers owner and the only other employee. We did the 5500 and SAR for the plan. The owner calls back and says that the asset section of the SAR is a little too specific, since with only her and 1 other employee, it is too easy for that other participant to figure out the owners account balance, contributions, etc. Could we revise the SAR to eliminate the specific asset data?

I can sympathize with the owner, but of course the answer is no for obvious reasons. But others in the office have suggested sending a revised SAR as requested, but stating plainly in the accompanying letter to the employer that the original SAR is required to be distributed as is and that is what we recommend doing. Still doesn't make it right, but does it help us (TPA) at all?

[E as in ERISA]

Change the discussion to one about how this could be fixed this for future years. Use two plans instead of one? Tested together. But separate reports. That may demonstrate that you are very interested in the client and trying to help do whatever is possible to resolve this reporting issue. But make it clear that does not include falsifying reports. Tell him it that in the event of a DOL audit, it would be best that you not have any copies in your records of the false reports. With normal turnover, it would be very possible that someone might innocently provide the DOL with a copy and it could cause significant problems for him. If he wants to do something like this, it would be best not to have other parties involved.

[Blinky the 3-eyed Fish]

Of course both plans will need to file a 5500 and the owner-plan's asset information is a public record easily accessible by anyone. Tell him to grin and bear it.

[Ron Snyder]

In addition to the foregoing responses, a third alternative might be for the employer to adopt into a single-employer/multiple-employer plan, such as one maintained by a PEO firm. My employees participate (along with myself) in such a plan.

[Santo Gold]

Grin and bear it may work best in this situation. Thanks.

[JanetM]

Had this years back when I did TPA work. We sent the year end package (bound report containing trust acct, participant data, 5500, SAR etc.) via US mail with return receipt to the Dr. or lawyer. The bound in letter would indicate that each participant must receive copy of SAR by a certain date per the regulations. We would quote the regs and all that.

Basically it was CYA for the CPA firm I worked at, kept the partner in charge happy and put the onus back on the client.