"fired" clients

[K2retire]

Bundled service provider who has physical control of the assets. After multiple contacts over 18 or more months has a handful of clients who have ignored all attempts to get their documents restated. After more contacts explaining the need for VCP filing, service provider resigns from the cases and instructs clients to provide direction about where to move the plan assets. Notice requirements of the written service agreement were met before this resignation. No instruction about moving assets has been provided.

Distribution requests from individual participants are now beginning to show up. What sort of liability issues might the service provider expect if 1) the requests are honored after resigning from the case or 2) valid requests are NOT honored because of the resignation?

[Kevin C]

2) results in a blackout after 3 business days. Were any blackout notices sent?

[K2retire]

We do not know.

[Peter Gulia]

Of the bundled service provider, is any business of it a plan trustee or plan fiduciary?

[K2retire]

No, at least we're trying very hard not be.

[Guest JWR]

You might want to check out the proposed DOL definition of fiduciary. If you are bundled with an entity that is a fiduciary, particularly if you are revenue sharing, you may get pulled into the co-fiduciary liability issues if your organization does not take affirmative action to correct the issue. At the ASPPA conference this topic was discussed but no definitive guidance was provided. There may be a requirement to report the non-compliant sponsor or notify the participants of the situation. In addition, the new PTIN rules could create additional issues under the standards of Circular 230 if the 5500 is prepared by your organization. As if all that isn't enough, even if you aren't a fiduciary, your company is subject to state law regarding negligence, breach of contract, etc. Keep in mind, an individual participant is NOT a party to the service agreement so the terms limiting liability, etc. may not apply to a suit brought on their behalf. Fun stuff.

[K2retire]

You might want to check out the proposed DOL definition of fiduciary. If you are bundled with an entity that is a fiduciary, particularly if you are revenue sharing, you may get pulled into the co-fiduciary liability issues if your organization does not take affirmative action to correct the issue. At the ASPPA conference this topic was discussed but no definitive guidance was provided. There may be a requirement to report the non-compliant sponsor or notify the participants of the situation. In addition, the new PTIN rules could create additional issues under the standards of Circular 230 if the 5500 is prepared by your organization. As if all that isn't enough, even if you aren't a fiduciary, your company is subject to state law regarding negligence, breach of contract, etc. Keep in mind, an individual participant is NOT a party to the service agreement so the terms limiting liability, etc. may not apply to a suit brought on their behalf. Fun stuff.

Having resigned from the case, we will not be preparing the 5500s. But the other issues you mention are enough to keep us busy.

[K2retire]

If the plan has not restated, (and it appears likely that it will not restate) are the balances eligible for rollover?