Files lost in fire

[SheilaD]

A client walked into my office the other day (sounds like the start of a joke) and told me her story. She and her husband run a small business with employees. He managed the plan. In early 2008 their broker (and tpa) essentially told them to take a walk because they were too small for her to manage. They went to Paychecks. The husband passed away shortly thereafter and now they have had a fire and there are no records left. They are in the process of firing Paychecks. She has no idea when the plan was effective, what teh provisions were or anything else. On the plus side the only money in the plan is salary deferrals.

I am trying all avenues to try to get copies of things like plan documents and 5500's. We don't have contact information on the prior broker as the husband was the person who contacted him/her and we can't find records. I'm hopeful that we might get SOMETHING from the accountants office. I beleive I've been told that there is a website where I can look at the prior 5500's or I can contact the DOL and request (on the clients letterhead) copies. A few questions.

Presuming that the plan document was never filed with the IRS, I was thinking of restating the document (as best as possible) and submitting it to the IRS explaining that what documents I lack and why. Agree/disagree?

Has anyone used the website where you can get 5500's on line -- is that free erisa? And is it really free?

Any other thoughts or warnings?

Thanks to all and a Happy New Year.

[jpod]

1. freeerisa.com. It's free.

2. All records were lost, or only plan-specific records? If the latter, I'd start with the 941s and W-2s for the business. This would help you reconstruct the elective contributions for each employee.

3. Where is the plan money invested? Wouldn't that vendor have participant account information?

4. Can't paychecks cooperate by giving you what it believes to be the current plan document?

5. Ask a trustworthy employee if he/she has a copy of the most recent SPD.

These are just for starters.

I think the goal is to first try to reconstruct the plan's financial records and each participant's account balance. Plan documentation is very important, but clearly a second goal as compared to the fiduciary duty to account for plan assets.

[Kevin C]

Paychecks should have the current plan document and participant account information. If they prepared a new plan document, they should also have the prior document. They needed that information to take over the TPA work on the plan. It is very likely they communicated with the broker (prior TPA) during the takover process or at least know who it was. I would start with having the client contact Paychecks to see what information they have. Or you can get her to authorize Paychecks to respond to you and you contact them directly.

[david rigby]

1. freeerisa.com. It's free.

Generally, the two most recent 5500's will be available free. You can get more, for a fee.

[K2retire]

Paychex SHOULD have everything you need, but my experience with them is hit or miss.

The plan should have a representative assigned to it. Have the client start there. They will want the client and branch number. If the decedent was the only contact person in their files, you'll have to find out how to get that changed before they will give you any information.

Many of the conversion plans that we see from Paychex have received a 5500, but never filed it. If that was the case for this plan they won't be on FreeERISA.com.

We also see many Paychex documents that don't include information that should have carried over from the prior document (like the original effective date or proper plan number). Try to get copies of the earlier documents, if possible, rather than relying on Paychex' document.

Good luck!

[leevena]

I have a warning, and it's for you, if you don't mind. In my 25+ years in this business I have seen many things, but this one does seem to take the cake.

This client seems to be blaming everyone but herself. 1. She and her husband run a small business, yet she claims to know nothing about the plan? She is both the co-owner and a participant, at some level she should have been made aware of the details. 2. A fire destroyed all the records? There are no copies anywhere, such as accountant, last tpa, etc.? 3. While I realize people/companies can make mistakes, I find it difficult to believe that Paycheck's is at fault here (I have no connection to them).

I am not recommending that you abandon this client, but I would be very careful. Good luck.

[K2retire]

Leevena, your warning is a valid. Care should be taken to determine if this client is simply uninformed, or beyond hope. But in really small businesses, it is not uncommon for one spouse to be totally out of the loop on some aspects of the business. This is often the same person who wouldn't know where any of the personal financial records were after her husband died. Sadly, my own husband would probably be in the same boat if something happened to me.

Sheila, the employer should receive investment statements. They are likely to come at the end of each quarter. At a minimum she should get something at the end of the year. There will be clues on those statements. They should be titled in the name of the plan, not the name of the business. If it is an individually directed plan (which most of Paychex plans are) there will be a separate statement for each participant.

[SheilaD]

Leevena, your warning is a valid. Care should be taken to determine if this client is simply uninformed, or beyond hope. But in really small businesses, it is not uncommon for one spouse to be totally out of the loop on some aspects of the business. This is often the same person who wouldn't know where any of the personal financial records were after her husband died. Sadly, my own husband would probably be in the same boat if something happened to me.

Sheila, the employer should receive investment statements. They are likely to come at the end of each quarter. At a minimum she should get something at the end of the year. There will be clues on those statements. They should be titled in the name of the plan, not the name of the business. If it is an individually directed plan (which most of Paychex plans are) there will be a separate statement for each participant.

Thank you all for your thoughts -- and cautions. I am reaching out to every source I can find and those suggested above. I appreciate the help.