Why we require salary data

[Guest liljunebug]

We have a client who has come unglued at the prospect of providing us with the information we need in order to do their complaince testing. This is the plan's first year & he refuses to give us any census data, as that's none of our business. (we are the TPA by the way.) We have explained compliance testing, etc. & what we have to do with the data, but he wants something in writing stating that they are legally required to give us the census data. I can't find anything that specifically says that, but I also dont' know how we would do the testing, etc. without the information. Any advice?

[QDROphile]

No obligation to give you the data unless your contract calls for it. I hope your contract does not call for you to do the testing without the means. Seriously, even if the contract is silent, if the client will not cooperate by providing the necessary data, you are not obligated to do the testing. So your argument is a practical one, not a legal one.

[Below Ground]

If you have explained why the data is needed, and the client still refuses, this client is an accident waiting to happen. While you might want to send something that explains ADP Testing (etc...), I would still get away from this client ASAP. Why? If there is no trust between myself and a client, how can I know if I am serving that client's needs. How about if the client does something really stupid, but says its your fault since you didn't say it couldn't be done. You can't keep a client out of trouble if they won't tell you what you need to do the job. There are simply some people who you just can't work with, and there are those really special people that blame others for what they do every time. I suggest that if you find one of those people (it sounds like you have) you will just be wasting your time and money, and exposing yourself to BIG trouble. Yes, I am speaking from experience. While I was able to prove that I was "innocent", what a waste of time it was!

[Steelerfan]

I agree with previous posters, but the fear is it's always hard to tell where TPA duty ends and fiduciary begins (not to suggest you'd have fid liab). Rather than get all the raw data, maybe you could compose a list of fill in the blank questions and let them fill in the numbers. Otherwise I'd suggest using this incident to renegotiate the contract and make it clear that they must provide you with the info you need either responsible for testing or must give you the i. They probably have illegal aliens on the payroll, and i don't mean the kind from MIB.

[Bird]

Contract shmontract. Anyone who can't see the common sense of why you need this data, and wants YOU to provide some legal basis for why you need it, is a problem. Don't get caught up in proving that you need it, or why you need it, just keep asking for it and if you don't get it you don't have a client.

[Belgarath]

Unless you charge a lot more for admin than we do, no client is worth this kind of baloney. Invite them to find another TPA who will administer their plan without salary data! Or to take a long walk on a short pier.

The only modification I can recall, off the top of my head, that we have allowed is in a situation where where the client makes well in excess of the 401(a)(17) limit, but doesn't like to say how much. As long as they certify that their income is in excess of that amount, then it is good enough. Of course, if unincorporated, it sometimes has to be certified as enough higher to back into a max calculation. But this is very rare - we've only had a couple of these, and it's probably been in an upcoming divorce situation...

[JanetM]

I would show the client the regs that require the testing in order for the plan to be Qualified. Explain that you must have the data to do the test on their behalf. If they don't provide it, you can't do the test.

I left TPA land a long time ago, but when I was in the biz we fired clients like this.

[Guest fender5150]

You might invite the client to do the testing and 5500 himself; or use an automated service. Though, this presents a problem also. If the client won't trust you with the data, why would he trust a web-based service?

Here's a couple inexpensive places (your client) could try to do it himself. I don't think he can get the job done himself: These services are only as good as the person using them. You might give him these resources as you are walking out the door - or running out the door:

-5500 prep: www.FTWilliam.com

-ADP/ACP testing: www.401ktest.com

Again; if he won't give you the data, why would he download it on the internet? So he'll have to take a series of courses and learn to do everything himself.

Good luck!

[Guest dbvail]

While agree this client may not be worth the time, it might be somewhat instructive to do a quick compliance test to show him what the real need is. How about you plug in $20,000 for all employees, run the test, and tell him that based on this he has to get a return of most of his deferrals. And as we are past 3/15, he's got a 10% excise to boot.

Perhaps that short excersize will enlighten the fellow (or woman).

We all wish you good luck.

[Guest TooMuchFreeTime]

Another approach may be to understand specifically what his issue is. I've had clients balk at sending comp records generally only to learn that they were nervous about identity theft due to the inclusion of SS#s and names; neither of which are really necessary.

Suggest the use of client-generated anonymous ID numbers for employee records (which, for testing purposes, would need to include compensation, date of birth, and service information). (You should note, however, that they should maintain internal records matching employees to ID numbers so that the testing may be audited if needed down the road).

If this still doesn't appease them, you may want to try to go over his head within the client organization, but ultimately, it may be more trouble than it's worth. As noted by countless others, if (after those concessions) he's still unwilling to provide the information, there are likely reasons you don't want to be a part of this relationship.

[Below Ground]

Neville Chamberlain appeased Adolf Hitler and we got WW2. Dump the client.

[Mike Preston]

Is it possible that the original post was started one day earlier and just wasn't actually posted until the next day?

[John Feldt ERPA CPC QPA]

... he said foolishly...

[ak2ary]

fire the client now...right now...if you want to write a note explaining why this data is absolutely necessary ...go ahead as long as you fire the client at some point in the letter. If you don't, this client will push you to lower your standards .. it will be a constant battle...each year you will lose money on the client and ask yourself

Why didnt i listen to the 27 people on benefitslink who said to fire this client????

btw i would fire the client

now

[david rigby]

Well.....

some of us are glad to help clients understand the nuances of plan design and administration. If you decide to resign (you can't fire a client), please let me know so I can offer to help the plan sponsor.

[Jim Norman]

Take a deep breath, be nice, and explain that he's not legally required to provide you the data. Assuming he wants the plan qualified, he is legally required to ensure the plan passes the various tests. Explain what ADP means (percentage of compensation) and how you cannot mathematically compute the percentage of compensation without the compensation numbers, no more than his CPA can compute his income tax liability without his income figures. Explain that your role is to perform these tests on his behalf, and if he doesn't want you to have the information, he will have to perform the tests himself or hire someone else to do it (who will also need the information.)

If he still balks, resign immediately.

[Just Me]

Buy the client a copy of the ERISA Outline Book with your best wishes as a parting gift. And then part.

[Below Ground]

Well, there you have it. Assuming that you do not have some special powers that the rest of us mere mortals do not have, and can bring the light of knowledge and understanding to this "client" by divinely transferring goodwill and sanity by a magical force, dump the client. (Read as resign.) Or perhaps, refer this jewel of a client to someone who knows he or she is superior to that rest of us in helping clients understand the nuances of plan design and adminstration, and needs this type of business to serve as their flagship client. (I agree that it might be worth it for someone else to take a crack at it, but I suspect that the original poster is associated with a fine service. Inference to the contrary is in bad taste, IMHO. ) Of course, I fully understand that there are supernatural forces out there that never have a problem, and all clients serviced are a picture of perfection. Could it finally be the fabled superior service for almost no money that we simple humans have dreamed of? Oh yes, anyone interested in buying ocean front property in Nevada?