3(16) Plan Administrator; 2 signatures needed on 5500?

[BG5150]

One of the selling points I've seen with 3(16) Plan Administration services, is that the 3(16) PA will sign and file the 5500, leaving the employer largely uninvolved.

In the past, if the PA and the Sponsor were the same, then the 5500 only needed to be signed in the PA spot. If they were different, then two signatures were needed.

Is that still the case in the age of e-filing? I couldn't find anything in the instructions.

If only on is needed, great! However, if both are needed if PA and Sponsor are different, does the 3(16) administrator still need to get the sponsors signature?

[Lou S.]

I think you only need one if they are the same. I believe you still need two if they are different. But I have not confirmed that.

[austin3515]

I'm looking for the all ammo I can get against this 316 nonsense!

[John Feldt ERPA CPC QPA]

My understanding is that the signature is only needed for the Plan Administrator to file the Form 5500 according a short reading through ERISA and the regulations. But, the 5500 and EFAST instructions (DOL has authority here) seem to state or at least imply that they want both signatures if the Employer and the Plan Administrator are different.

My recommendation is to have both sign when the PA and ER are not the same entity, but I am interested in hearing anyone else's conclusions on this.

[BG5150]

John, where in the 5500 instructions do you see that? The only place I see anything about signing things is in the Electronic Filing section.

Signature and Date
For purposes of Title I of ERISA, the plan administrator is required to file the Form 5500. If the plan administrator does not sign a filing, the filing status will indicate that there is an error with your filing, and your filing will be subject to further review, correspondence, rejection, and civil penalties. The plan administrator must electronically sign the Form 5500 or 5500-SF submitted to EFAST2.

And further down:

Note. The Code permits either the plan sponsor/employer or the administrator to sign the filing. However, any Form 5500 that is not electronically signed by the plan administrator will be subject to rejection and civil penalties under Title I of ERISA.

The only other signatures the instructions mention are for actuary-related things.

But for the 8955-SSA, are we out of luck? The signatures still seem to require both (only one if they are the same)

Signature. Form 8955-SSA must be signed and dated by the plan sponsor and by the plan administrator. If the plan administrator and the plan sponsor are the same person, include only the signature as plan administrator on the form. If more than one page 2 of the form is filed for one plan, only one page 1 of Form 8955-SSA should be signed and filed with the pages 2 for the plan.

[John Feldt ERPA CPC QPA]

I agree on the 8955-SSA - two signatures if ER<>PA.

If you look through DOL EFAST questions 30-33 I think these perhaps imply both signatures may be needed?TAG believes both must sign.

EOB, in Chapter 13A, Section III, Part B, 1.d.2)a) "Plan administrator different from plan sponsor. If the plan administrator is not the plan sponsor, then both the plan administrator and the plan sponsor will have to obtain separate signing credentials." Also implying both sign?

DOL website on EFAST2, Q31: Do you need a separate registration for the "Employer/Plan Sponsor" and for the "Plan Administrator" (two separate signature lines) if the employer/plan sponsor and the plan administrator are the same person?

No, you only need to register one time for both purposes. The credentials that you get can be used for multiple years and on multiple filings. If the same person serves as both the plan sponsor and plan administrator, that person only needs to sign as the plan administrator on the "Plan Administrator" line.

Does it directly say both sign if they are different? Not exactly. It's unsaid. So you decide - you don't need both signatures? Or is it just understood to mean both must sign. I am curious to hear what others think.

[BG5150]

I'm looking for the all ammo I can get against this 316 nonsense!

Why u mad, bro?

[austin3515]

Well they come in with their marketing pitch about how they will do ALL of this amazing stuff, when what it really comes down to is they will mail out SPD's, which I would be happy to do for a fee. Oh whoops I almost forgot that they will also get you a fidelity bond. What a relief! There's 5 minutes saved every 3 years!

And my biggest issue is that every critical problem I have ever seen a 401k plan is not addressed in any way by 316 services:

• Bad census data
• Bad vesting
• Ineligibles participating
• Payroll processing issues
• Late deposits
• Misclassified keys/ownership
• Controlled group/ASG issues
• Missing deposits
• Contributions to the wrong participant
• Contributions to the wrong source
• Definition of compensation issues
• Automatic enrollment issues

I could keep going! And they charge a fortune!

[John Feldt ERPA CPC QPA]

Of course, there are some (uhhh umm), reputable 3(16) providers that actually handle and/or monitor much of what you list plus a lot more. Monitoring cannot necessarily prevent certain issues - that still takes a conversation with the employer/payroll regarding practices, procedures and handling internal controls.

[austin3515]

Of course, there are some (uhhh umm), reputable 3(16) providers that actually handle and/or monitor much of what you list plus a lot more. Monitoring cannot necessarily prevent certain issues - that still takes a conversation with the employer/payroll regarding practices, procedures and handling internal controls

Yes, but are they completely absolving the sponsor of any responsibility? I think not. How could a 316 accept responsibility for the accuracy of census data and that they indicated all of the correct family relationships (as an example)? How can the 316 ensure that deferrals do not take place from severance? Or that the max comp limit is not exceeded on a payroll-to-payroll match? Or all of the other problems that clients face? My point is fidelity bonds and SPD's and taking 35 seconds to sign a 5500 are not problems that need solving.

[austin3515]

And by the way, me as a TPA, I have procedures in place to identify those mistakes as they happen and help clients correct them. I hardly think that the 316 is going to pony up lost earnings for the client's mistakes.

[RatherBeGolfing]

And by the way, me as a TPA, I have procedures in place to identify those mistakes as they happen and help clients correct them. I hardly think that the 316 is going to pony up lost earnings for the client's mistakes.

But they told me they were a FIDUCIARY!!! You mean I actually had to read the fine print and maybe look up Awesomefiduciarytrainingforoutofworkrealestateagents.com who issued the fiduciary "certificate"?!

[John Feldt ERPA CPC QPA]

Of course they are not completely absolving the sponsor of all responsibility, and I imagine their service engagements spell out the items where they take on fiduciary liability.

One example, a periodic analysis of payroll seems prudent, keeping tabs on every payroll would certainly be better, if that's affordable - and if you build a good system to check every payroll, maybe it can be affordable. Will there still be errors, yes, but they will be monitored and hopefully addressed more quickly and procedures addressed and changed for the better.

3(16) may also be for the type of prospect that says "what, you mean that e-mail from the investment provider about some 404 notice thing? - Yeah, we've never done anything with that and we don't have time for it - even if you send it to me we're not mailing that out." - These are the folks that need some help. Then to say that you are willing to act as a fiduciary on certain aspects of the plan, well that does have some legitimate appeal for the right plan sponsors.

[jpod]

The Plan Sponsor will retain the fiduciary responsibility to monitor the performance of the hired 3(16) PA and fire it if it does not perform. So, IMHO the liability shelter you are paying for is quite possibly pie in the sky.

[John Feldt ERPA CPC QPA]

From that standpoint, certainly. I assume they are paying for services - how can they just pay for a liability shelter?

[jpod]

My assumption is that they charge a whole lot more because of the purported liability shelter derived from them (supposedly) assuming 3(16) status.

[austin3515]

Yes but my point is they are assuming liability for those functions that do not expose the sponsor to liability. And all of the things that do expose them to liability are not addressed.