TPA Liability for 5500 Answers

[Guest ActuaryWannabe]

I'd like to get a feel for how people are dealing with this. We are a TPA, and we have a few clients who we know have not been remitting 401(k) contributions timely. They have ignored our advice to change their practice.

Now, 5500 time. The administrators want to indicate on the Schedule I that not all participant contributions were remitted timely. However, the owner of our company wants us to indicate that they were, and simultaneously give the client another verbal and written spanking.

Do you think we have liability if we knowingly answer a question like that incorrectly?

[rcline46]

In our annual questionnaire to the client, we ask THEM if all deposits were made timely, and the client signs it. We only report on the 5500 what the client has, in writing, told us.

[RCK]

What do you mean by not remitting timely? Not as soon as possible, or not by the 15th of the month following the month of deferral, or . . . .

And are you just preparing the 5500 for their signature? IF that's the case, I'd prepare saying that they did not submit in a timely manner, and if they do not like it, have them instruct you in writing to change it to a yes.

You know that if they get caught, they are going to plead ignorance and blame you.

Did you say a few clients (plural)?

[JanetM]

Am sure there are many. Back in my TPA days in the late 90s it was most of the small employers who would only remit once a month. Am sure there are just as many now.

[Guest ActuaryWannabe]

We have that on our questionnaire too, but we seem to have trouble educating our clients on how to answer it. However, in most cases we have access to their transaction history (insurance company product), and can see that deposits are being remitted monthly instead of every payroll.

And yes, the issue exists with a "few" clients, although I believe all except this one have agreed to correct as needed.

[Erik Read]

Your question was if you have liability or if the firm has it?

If the owner of your firm is TELLING you how to answer the form, document it in writing - then at least you are not liable - the firm is. I think you still have an issue.

The other thing you can do, is tell the client they will need to answer the questions on the form, and sign accordingly, then send you a copy of what they submit.

Your option short of that - is to fire the client or recuse yourself from the plan and have someone else in the office assigned.

[Guest ActuaryWannabe]

I miss the good old days when you could send a 5500 out and tell the client to answer certain questions. Damn barcoding has put an end to all that.

I'm not concerned about my own liabililty.... my name does not appear anywhere!! I just want to make sure the owner is aware of the firm's liability, if any, if he chooses to follow this path.

[Erik Read]

DOH - shows you how long it's been since I've actually done the 5500 myself - huh... yikes.

Guess I'll just fade away now.

[JanetM]

ERead, 1999 was the first year they added the barcode stuff and split the form into schedules. Don't think it has been so long............

[david rigby]

Liability? To whom?

If the deposits have been tardy, the regulators will not care who filled out the 5500. They will care who signed it, but even more important, they will care about facts; you know, such details as whether the deposits were really late. It is the task of the sponsor/plan administrator (not the TPA) to make the deposits and keep a record.

[R. Butler]

I've had that same issue before. If contributions are remitted within the outside time frame I will acquiesse to the boss without much discussion. If contributions are made outside of that time frame I have been able to convince the boss to at least force the client to provide us with their written assertion that the contributions were made timely.