Plan has problems and accountant refuses to cooperate

[Santo Gold]

A small MP plan has several violations going back to the plan's 1999 inception, including no 5500 filings, document not updated for starters. The accountant determined the annual contribution for the plan, but did nothing else plan related. Our TPA firm was brought in to help clean up the mess, which apparantly has ruffled the accountant's feathers. We would like to see payroll records going back to 1999 to confirm that deposits were correct, as well as to get accurate partiicpant figures in order to complete the 5500s from 1999 - 2005. Accountant has told the owners "since you have hired a TPA, we are not going to retrieve this data".

Is the accountant obligated to provide this information? A reasonable fee would be in order of course. How would you proceed?

[Guest greybeard]

A small MP plan has several violations going back to the plan's 1999 inception, including no 5500 filings, document not updated for starters. The accountant determined the annual contribution for the plan, but did nothing else plan related. Our TPA firm was brought in to help clean up the mess, which apparantly has ruffled the accountant's feathers. We would like to see payroll records going back to 1999 to confirm that deposits were correct, as well as to get accurate partiicpant figures in order to complete the 5500s from 1999 - 2005. Accountant has told the owners "since you have hired a TPA, we are not going to retrieve this data".

Is the accountant obligated to provide this information? A reasonable fee would be in order of course. How would you proceed?

If the accountant is a member of AIcpa they have a code of conduct. Rule 501. 501-1.

[E as in ERISA]

If the accountant "determined the annual contribution...but did nothing else" why do you think that the accountant has ownership of the payroll records or other participant records??!?!? Is it just that no one else has done a good job of maintaining that info -- and you think that at one time the accountant had access to that info and might have kept better records than others? Often clients go back to their accountants and ask the accountants for data that the client should have -- and expect the accountant to spend several hours retrieving it -- for free. Any data that the accountant has is likely in several different years worth of files and will take some time for someone to identify which files and where they are and then have it hauled from some remote location and have someone retrieve it and copy it.... And the client could probably do exactly the same -- only it would be even more difficult -- because their records are probably more extensive and not as organized -- so they are trying to go the easy way...

[Santo Gold]

EAIE: I should have been clearer....the accountant's only involvement with the plan appears to be determining the contribution each year (including determining who is eligible). He would had to have had payroll records to make that determination, so he is the logical choice to request the data from. I agree, a fee to recover those records is fair, as long as it is reasonable. Accountant handled all other aspects of the employer's payroll and company tax transactions.

I think the problem is that accountant is pointing fingers at the financial advisor, since he (FA) set the plan up and it was his responsibility to inform the client of all of the compliance issues that would need to be handled (probably true). However, I don't like the accountant's apparant "ostrich" defense in that he knew about the plan and did the contribution calculations, but kept his head in the sand regarding other possible violations.

Our objective is to bring the plan into compliance and then terminate it. The plan has a lot of exposure for all of the neglect over the years. I would think that the accountant should be more helpful in resolving these problems, even if he is not the main person involved. To not do so would seem to put his client at ongoing risk, which is not in their best interests.

[GBurns]

There should be no fee for providing the payroll records.

The payroll and any other accounting records belong to the client and have to be maintained by the client. The accountant might have used the payroll records to facilitate doing something else but once that is finished the records should have gone back to the client. The accountant can, and in some cases has to, keep copies but the originals etc belong to the client.

Have the client demand that the accountant turn over the client's property.

[Guest BXO]

GBurns - why would you expect an accountant to provide off-site storage for employer records for free?

You assume the accountant has the originals; that has not been determined.

[GBurns]

There are only 2 parties involved, the client and the accountant. It seemed to me that the only reason that the TPA would be trying to get the payroll records from the accountant would be because the client did not have the records. There are only 2 types of records, originals and copies. If the client had a copy there would be no need for the TPA to ask the accountant for the records, so it appears to me that the accountant has the original and any copies.

In any case the OP makes no mention of any charge for storing documents, the charge would be for "a fee to recover those records " or "to retrieve this data" . It was not for storing the documents.

There is no need for any accountant to provide storage for free because there is no reason to store the clients documents unless so requested which would be a separate issue not an accounting function but a client facilitation. Requirements to store documents such as tax returns prepared etc are professional or legal requirements which are part of the cost of doing business as an accountant, tax preparer, insurance agent, lawyer etc. I cannot imagine a lawyer charging for storing his case files, he has to keep his own records. The same for a tax preparer, who has to keep copies for years even when he never sees that client again. The same for your insurance agent.

[E as in ERISA]

Clients often have the original but have a hard time figuring out how to find it...and their experience seems to tell them that the accountants records are much more organized...because as we now all know they shred all the extraneous info...

[Guest Pensions in Paradise]

First, what does the service agreement between the client and accountant say about the retention of records?

Second, why do you think the accountant is responsible for monitoring possible plan violations? Thats not the accountants job.

[Santo Gold]

First, what does the service agreement between the client and accountant say about the retention of records?

Second, why do you think the accountant is responsible for monitoring possible plan violations? Thats not the accountants job.

I will check on the service agreement between the accountant and client. Thats a good place to start.

Accountant may not have been responsible for monitoring any violations, but he was aware that the plan was not in compliance and should have at least said something. If I see a bank being robbed, I do not have to stop the crime being committed, but I am obligated to at least call someone for help. The accountant should have at least made the sponsor aware that violations existed and were ongoing.

[Guest Pensions in Paradise]

When you say there were violations, are you referring to document issues or administration issues (coverage, testing, etc.)? Either way, how was the accountant aware of the violations?