Naming of Plan Administrator

[TPA Bob]

We sponsor a corbel volume submitter plan and in the adoption agreement always name the Plan Sponsor as the Plan Administrator.

We received an RFP from a Plan where we are the current TPA and they are using their document. In the RFP they have named the person who handle their HR as the Plan Administrator.

If I was advising the HR person I would tell him that there is no way I would want any document saying that he is the Plan Administrator.

Am I being overly protective or overly sensitive? Any comments appreciated.

[QDROphile]

Would you rather tell the independent directors of the company that they (and others) are ERISA fiduciaries, which would be the case if the plan sponsor were named as the plan administrator?

Who do you think it should be? The HR person is the person who, in fact, is usually responsible for operation of the plan. Who better to discharge the responsibilities?

I recommend a committe of the chief HR person and whoever else is supposed to have top level responsibility for the plan, such as the CFO.

[austin3515]

I sometimes discourage people from signing the 5500 but I think the laymen's definition of "plan administrator" (that is, the person who administers the plan) gives enough leeway.

[TPA Bob]

QDROPHILE - The HR person was not told he was the Plan Administrator - the RFP from the investment professional names him as such, which I believe is a mistake. I agree that if we told him he was the Plan Administrator and he accepted that would certainly be ok. But without that formal process I would say that the officers of the Plan Sponsor is the deemed "Plan Administrator(s)". The same logic would apply to the signing of the Form 5500 - he should not sign unless he is authorized and has accepted that role.

The Controller of a Company maintains the books but rarely would ever sign an income tax return. It is the responsibility of the officers of the Company.

My comment was mainly on the RFP - is this a mistake by the investment professional or not a big deal. I lean toward it being a big deal (or at least something I would not want to see in writing). Did not know if others agreed.

[Lou S.]

What happens when the HR person is fired or leaves?

It may or may not be a "big deal". If the HR person is a office of the company and know what he/she is getting into probably not a big deal. If the company is saying Oh by the way your our ERISA Plan Administrator to the person who calls in payroll, possible a big deal.

Just my opinion.

[austin3515]

If the Plan Document does not designate the HR person as the Plan Administrator then he or she is not the Plan Administrator. The broker putting the words Plan Administrator in an RFP does not make it so. He could put in the RFP that the Plan is profit sharing plan when in fact it is a money purchase but it would not make it so.

Again, I think the fact that a literal definition of plan administrator (I mean Webster Dictionary) would describe the HR person. And for that reason I think you are OK.

I will give you another example though - often times I receive QDRO's where the order names my TPA firm as the "Plan Administrator" and when that happens it's first on my list of required changes. But then, that is a legally binding document, and therefore much different in gravity than a mere RFP.

[TPA Bob]

Thanks for the replies. I have seen cases where the payroll clerk is signing the payroll tax forms and then is personally liable (potentially) for the payroll tax if not paid by the Company. Just trying to protect the HR person in this case. And trying to say our services point out these potential issues that others may or do not see.

You are right, if the RFP says something that is not true it does not make it true. Good point.

[QDROphile]

I misunderstood the question to be more like "Who should be named as the plan administrator?" than "Should we do anything if we see an apparently mistaken identification of the plan administrator in an RFP?".

[BG5150]

If this HR person is named in the document as PA and leaves, he or she will still have the responsibility and liability of the PA even though they have no control over anything. Do you trust the directors of the company to amend the plan as soon as the person leaves or transfers positions in the company?

[masteff]

Definitely in a bigger company, a benefit plans committee is a good way to go.

[GMK]

BG - probably don't have to amend the plan to name a new PA (depending on the wording in the plan document), but they may have to name a new person(s) in writing.

As to whether a person is called the PA, the person who "runs" the plan is covered with tons of fiduciary responsibility by virtue of having the authority to make decisions about the funds, etc. They cannot rest easy simply because they are not identified as the PA.

I remain interested in the 'who should be named PA' question. I can see that the Board might feel somewhat shielded by naming a person or a committee, instead of the plan sponsor, as PA. But the board members, including the outside directors, retain the fiduciary responsibilities for choosing competent, trustworthy PA personnel and for monitoring their performance. If someone decides to sue, I don't see that the company/directors can claim, "You can't sue us, because it was the PA that messed up." Maybe in practice, such an argument works. I'm just trying to understand the value in an effort to isolate board members from fiduciary responsibilities, compared to simply naming the plan sponsor as the PA.

[QDROphile]

The board does not have responsibility for naming a fiduciary if the plan document gives that authoriity to someone else, such as the CEO. That means you are screwed (in so many ways) by using a prototype plan. If the prototype does not name the sponsor as the plan administrator, the best that you get is a provision that the sponsor can name a different plan administrator, and the authority to act for the sponsor rests with the board unless corproate governance documents provide otherwise.

[GMK]

Thanks. That clears up most of it.

[david rigby]

"The HR person was not told he was the Plan Administrator - the RFP from the investment professional name him as such..."

Why would anyone think the RFP is an official plan document?

Why would anyone think the investment professional has any authority in this matter?

Most likely, the RFP format had a blank line and the investment professional completed it as simply as possible.