Failure to forward deferrals

[k man]

We are a TPA to a plan where the plan sponsor is not forwarding deferrals to us. Due to the fact that we are a fiduciary and trustee to this plan, what course of action can we take to protect ourselves from liability?

[Alf]

I think that you have to turn them in or sue them to be totally protected, especially if you are a fiduciary. There was a recent case involving this exact situation. I am not sure how it turned out, but the TPA was in court trying to avoid liability for discovering a prohibited transaction or fiduciary breach and not taking action to correct it. Check with your counsel to get the details.

[k man]

Does anyone know the cite for that case discussed by the previous post.

[Lynn Campbell]

I just read this in a newsletter from PPIB.

Look at http://www.benefitslink.com/ppib/industryn...essionals.shtml (an article entitled "The Pension Professionals, Inc. Case").

[This message has been edited by Dave Baker (edited 04-23-2000).]

[Alf]

Yeah, that's it. Thanks Lynn!

K Man - The case doesn't help you any if you are a fiduciary. You situation is even tougher than that faced by a nonfiduciary TPA.

[k man]

I know. Unfortunately I looked at the case and I agree. The next question is what can we do as a fiduciary in order to protect ourselves. I suppose we should send out some kind of letter to the client.

[Kirk Maldonado]

Besides a participant lawsuit, if I were you, I'd also worry about DOL enforcement activity. The failure to forward deferrals is a real hot button for them.

[k man]

for the record, we are talking about a small plan in this case and only one person is currently deferring. However, I want to take the correct action to protect my firm in the event the employer does not make eventually forward the deferrals.