Docusign?

[austin3515]

IS anyone using DocuSign to get clients to "manually" sign the Form 5500?  Using Docusign is MUCH easier then the whole credential process, and people are getting more familiar with signing documents this way.

Has anyone ever asked the DOL if this is acceptable?

[Kristina]

It is my understanding that the manual signature needs to be a 'wet signature'.  DocuSign does not meet that requirement.

Since you are using the E-Signature Alternative, I think your clients would be most familiar with pen and ink signing and faxing the form back to you.

[Larry Starr]

When the DOL revealed their overly complicated system for dealing with "credentials", I was in the audience and raised a number of questions.  Like, why can't *I* get the credentials for all my clients? They thought they were so smart because each request has to be from a unique email address. DUH! I have my own domain and explained that I can assign a "unique" email address to each client that all comes right back to ME!  If I have the credentials, and store them in my client records, I can sign their returns with their credentials. They were NOT happy with me. They said you CAN'T do it that way; then I asked what the penalty was if we did! That stumped them. They finally relented that there is no penalty, but it would be as if the employer actually signed, and they thought that was a bad thing.  I explained that's exactly what we want! And that's what we developed.

A short while later, they introduced the additional option of having the the admin firm sign with written authorization, but they actually checked with me before issuing that to see what I thought of that. I told them I thought it was better, but we still weren't going to do it that way. The IRS has had a system for years that allows practitioners to sign, but DOL was guilty of the NIH (not invented here) malady and had to invent their own complicated method.

So, now we get the credentials for all clients (using an authorization form that they sign when they become a new client that spells out exactly what we are doing).  We send them the hard copy of the 5500 and have them sign and return the first page to us for our files to prove they got the hard copy.  It comes back mostly by fax or scanned and e-mail. We then file electronically and the clients don't have to deal at all with the EFAST system; they don't even really know that it exists.

Austin: if you went with this methodology, then I think using Docusign would most likely provide all you need to have in your files.

[Larry Starr]

6 hours ago, austin3515 said:

IS anyone using DocuSign to get clients to "manually" sign the Form 5500?  Using Docusign is MUCH easier then the whole credential process, and people are getting more familiar with signing documents this way.

Has anyone ever asked the DOL if this is acceptable?

Austin: I suggest you read my long response; at the end of it there is a specific comment that you might (or might not) find helpful for how you might do things.

[austin3515]

that is the textbook definition of chutzpah!

[Bird]

Larry, would you literally sign a 5500 for your client before the E-Fast system came along?  Isn't e-filing for them doing the same thing?

[Larry Starr]

Bird,

No, we would not have signed 5500s before the E-Fast system.

No, this is not doing the same thing. 

We are applying THEIR credentials; we have their authorization to both get the credentials, store them, and apply them on their behalf.  DOL treats it exactly as THEIR signature (it is not me signing their name; it is their actual "signature" under this ridiculous system).

I will tell you that there are a large number of entities that are now doing this very same thing; I have freely provided the system and the simple forms we use for client authorization.

While the DOL was not happy with me finding this "hole" in their system, they have agreed that there is nothing wrong with what I am doing as long as the client understands that our sending in the electronic version is considered THEM signing the form, which is perfect because that's exactly what we want.

Remember, we have a signed copy of the form in our records.

[Larry Starr]

On 6/9/2018 at 6:11 AM, austin3515 said:

that is the textbook definition of chutzpah!

Sorry Austin; not even close.

Definition of chutzpah : supreme self-confidence : nerve, gall 

It is an absolutely permissible use of the system they designed; it is creative, but not nervy.

[austin3515]

19 minutes ago, Larry Starr said:

While the DOL was not happy with me finding this "hole" in their system

I guess we have a different definition of chutzpah :)

[Belgarath]

Chutzpah - a child murders his parents and then throws himself on the mercy of the court because he's an orphan.

Or, Congress having an ethics committee.

[Bird]

18 hours ago, Larry Starr said:

We are applying THEIR credentials; we have their authorization to both get the credentials, store them, and apply them on their behalf.  DOL treats it exactly as THEIR signature (it is not me signing their name; it is their actual "signature" under this ridiculous system).

I thought they made it clear - somewhere - that the person filing had to be the person who signed.  But, whatever, we'll continue to file with an authorization if for no other reason than it is easier.

[austin3515]

See questions 32 and 33.

https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf

 

[Larry Starr]

OK guys, listen up here.

Here are the two questions Austin listed:

       Q32: Can I register to get Filing Signer credentials for my clients?

       No. The EFAST2 process for obtaining Filing Signer credentials is designed so that the                   person signing electronically must be the person registering for the credentials. Further,                 Filing Signer credentials are attributed to a single person and must not be shared.

     Q33: I am a plan administrator that needs to electronically sign a Form 5500. Can I tell the             service provider that manages the plan's Form 5500 filing process what my PIN is so the               service  provider can sign and submit it for me?

     No. As the plan administrator, you must examine the Form 5500 or 5500-SF that will be sent         to EFAST2 before it is submitted. Your electronic signature attests that has been done and             that, to  the best of your knowledge and belief, it is true, correct, and complete. Since the               EFAST2 PIN is  the plan administrator/plan sponsor electronic signature for purposes of the         Form 5500 and Form  5500-SF, PINs must be protected and not shared. However, as                       described below in response to question 33a, if a service provider manages the Form 5500           filing process for your plan, the service provider may get his or her own Signer credentials             and electronically sign the filing attesting that he or she is authorized to submit the                         return/report and has attached a PDF copy of the plan's Form 5500/Form 5500-SF that has           been manually signed and dated by the plan administrator under penalty of perjury.

These are exactly the same things they said at the industry meeting where this was announced and I sat in the front row and asked questions.

With regard to Q32, I explained earlier how it took me 2 seconds to explain that their "design" was faulty. I could (and have) obtained credentials for every one of our clients with a unique email address, all of which are really ME!  (They are called aliases.).  So the answer is YES, I can register to get Filing Signer credentials for my clients (and we do). As to the "must NOT be shared" in the last sentence, my question to them was "or what?".   In other words, what is the "penalty" if they are shared.  They hemmed and hawed and finally said "there is none".  And, folks, they are not authorized to have any penalty. If there is no penalty, then saying you "can't do it" is a nonsensical statement, because obviously I can and without any repercussions.

Now, with regard to Q33, again the answer is YES. The client gets a hard copy (or electronic copy to print out) and must return a SIGNED 5500 to us before we file. That means he has done all those things that he is attesting to by signing it, and us attaching his credentials for DOL is perfectly ok.  Again, while they say ... the "PINs must be protected and not shared", I again asked "what is the penalty" if they are?  Guess what? NO PENALTY.

And to reference the Q33, that is what they came up with after our meeting and specifically asked for my input on before announcing it to the world.  I told the it was a step in the right direction, but I specifically objected to having a PDF copy of my client's signature available for all the world to see and duplicate.  Talk about identity theft issues!!!!!  They added that last sentence to the second paragraph of Q33 ("The service provider also must inform the plan administrator, employer/plan sponsor, or DFE that, by electing to use this option, the image of the plan administrator's, employer/plan sponsor’s, or DFE signee’s manual signature will be included with the rest of the annual return/report posted by the Labor Department on the Internet for public disclosure") was added specifically because of my objection to this methodology.

So, we will stick with our perfectly permissible method and the client's legal signature is not out there for everyone to copy.

 

[Larry Starr]

8 hours ago, Bird said:

I thought they made it clear - somewhere - that the person filing had to be the person who signed.  But, whatever, we'll continue to file with an authorization if for no other reason than it is easier.

My way is even easier; no PDF of the signed form required and no chance that the client's signature will be copies for identity theft.

[austin3515]

23 minutes ago, Larry Starr said:

I again asked "what is the penalty" if they are?  Guess what? NO PENALTY.

So I take it you also advise against having fidelity bonds?

[Larry Starr]

You guess wrong.  Why would you guess that? Do you think there is no penalty for failure to obtain a bond?  We actually take care of getting the bonds for our clients and keeping them up to date.

 A plan fiduciary who fails to ensure that those persons who handle plan assets are properly bonded may be personally liable for any losses to the plan attributable to the fraud or dishonesty of others.

Plus, there is the penalty of having to deal with DOL if you don't have proper bonding (it is disclosed on the 5500 as you well know). 

And the DOL can actually move to have unbonded trustees legally removed from their trustee role.

Just some of the reasons why this is not the same issue.

[austin3515]

OK I'll let you have the last word 

[Bird]

Just to drag this out (and I know Larry will not let anyone have the last word)...

I do see them as similar.  You (Larry) are signing those returns for the client.  The DOL made it very clear that the one pushing the buttons to file should be the one whose name is on the return.  There aren't any consequences because 1) nobody knows, and 2) the only way it is a problem is if there is something fraudulent in the returns, and since you're preparing them, you have every confidence that they are not fraudulent.  But if sh*t hit the fan for some reason, and they investigated, they could say that you followed improper procedures and ultimately hold you responsible for the fraudulent filing (IMO).  I know they admitted there is no "penalty" but I think you caught them on a bad day when they weren't thinking it through.  The penalty is being held responsible for filing the return.

With the bonding issue, there is no "penalty" (and in reality we know that consequence is "you better get a bond") but as you note trustees can be held personally liable.  Well, when you have self-directed accounts (or not, but prudently invested assets and a modicum of care) and the owner has 85% of the assets and isn't actively stealing the rest, well, let's admit it, the bond isn't protecting much of anything and similarly never becomes a real issue.

[austin3515]

 

48 minutes ago, Bird said:

With the bonding issue, there is no "penalty" (and in reality we know that consequence is "you better get a bond") but as you note trustees can be held personally liable.  Well, when you have self-directed accounts (or not, but prudently invested assets and a modicum of care) and the owner has 85% of the assets and isn't actively stealing the rest, well, let's admit it, the bond isn't protecting much of anything and similarly never becomes a real issue

I _____ you not, I began writing to make this exact point and then decided to let it go :).  I felt freed to mention this because Larry already has relinquished the last word 

[K2retire]

Over a decade ago I attended a DOL Speaks conference at which the speaker indicated that they do pursue plans that indicate no bond on their 5500. I spoke to her after the presentation and pointed out that I had seen thousands of them filed and never encountered any follow up. She was incredulous!

 

[Larry Starr]

7 hours ago, Bird said:

Just to drag this out (and I know Larry will not let anyone have the last word)...

I do see them as similar.  You (Larry) are signing those returns for the client.  The DOL made it very clear that the one pushing the buttons to file should be the one whose name is on the return.  There aren't any consequences because 1) nobody knows, and 2) the only way it is a problem is if there is something fraudulent in the returns, and since you're preparing them, you have every confidence that they are not fraudulent.  But if sh*t hit the fan for some reason, and they investigated, they could say that you followed improper procedures and ultimately hold you responsible for the fraudulent filing (IMO).  I know they admitted there is no "penalty" but I think you caught them on a bad day when they weren't thinking it through.  The penalty is being held responsible for filing the return.

With the bonding issue, there is no "penalty" (and in reality we know that consequence is "you better get a bond") but as you note trustees can be held personally liable.  Well, when you have self-directed accounts (or not, but prudently invested assets and a modicum of care) and the owner has 85% of the assets and isn't actively stealing the rest, well, let's admit it, the bond isn't protecting much of anything and similarly never becomes a real issue.

Bird,

Not to get the last word, but NO THEY CAN'T!

"But if sh*t hit the fan for some reason, and they investigated, they could say that you followed improper procedures and ultimately hold you responsible for the fraudulent filing (IMO)"

No they can't!!

What the DOL made clear is that their system contemplated having the individual apply their own credentials.  They did not design it to mandate that.  Both their methodology (the silly "unique email" rule) and the lack of any penalty means that we can do it "my way" without penalty.  BTW, the DOL has agreed that my way works (they just don't like it, and that's why they thought to come up with their additional method that included the PDF attachment and actually asked me what I thought BEFORE they announced it).

Yes, if there is something fraudulent, the client will be held responsible by DOL and we agree that is the case . Yes, the client might be able to sue me if we screwed up, but that situation is no different than if we actually did it the DOL way. Remember, the client has actually signed the return and provided us a copy and we do not file UNTIL they have done that.  The DOL actually did say that if we attach their credentials, the return will be treated as if the client signed it.  They thought that was a "penalty"; I explained that that is exactly what we want!  The same as if the client followed their "preferred" system. The DOL has no authority to hold me responsible; none.

This has been extremely well thought out and vetted with the DOL at the highest level of responsibility for this program.  I will spill the beans: those at DOL who are administering the program (they did not get to write the process or even have much input into it) think it was a gross waste of money and is overly complex and that they should have just adopted the IRS method which is good enough for filling REAL tax returns!!!  But you didn't hear it from me (names have been deleted to protect the rational!).

And of course the bonding never becomes a real issue.  But having to deal with DOL letters when you say you don't have a bond is a headache my clients don't want.  If a client were to ever say they are not getting a bond, I would simply say they have to deal with the DOL letters.  The cost of the bond is cheaper than paying me to deal with the DOL letters. 

I also tell all my clients that bonding is stupid.  I tell my clients that my clients are smart enough that if they are going to steal the money from the plan, they are going to steal more than 10% of the plan!  It's just one (relatively minor) inconsequential cost of maintaining the plan.  Sort of like PBGC premiums for the small DB plan which has zero risk to the PBGC.

If you think anything I have said is wrong, go ahead and try again; maybe you can get the last word! :-)

 

[Bird]

15 hours ago, Larry Starr said:

Yes, the client might be able to sue me if we screwed up, but that situation is no different than if we actually did it the DOL way.

I think there is a difference.  I don't see how the client can sue you if you do it the (approved) DOL way (of course they can sue you but I don't see how they can win...what would you/we have done wrong?).

If you do it your way, in some theoretical and hypertechnical drama, it would be shown that you pushed the buttons to file for your client in an unapproved manner and therefore share some responsibility for the filing. 

Having said that, I freely admit that there are times when I say "screw it, we have to get this over with" and do stuff that isn't 100% proper.  I'm just not willing to make a policy out of it.

[Larry Starr]

The possibility of suing us is for screwing up the information on the return, not for the process of filing the return. Whether we use the favored DOL method of my alternate method, the client can always sue for a screw up that costs them money.

There is zero risk for suing us for the methodology of filing the return because there is nothing that allows for any loss to the client in using our method; the DOL has agreed with that (even though they don't like it - at least, some of them at the upper levels didn't like it!).

There just is no theoretical or hypertechnical issue where filing in an "unapproved manner" could be raised by the government.  Was it filed? Yes.  Were the credentials attached?  Yes.  Was a signed copy of the 5500 obtained and kept? Yes.  Roger: all systems go!

Trust me; there is nothing improper about this method; it just is not what the DOL contemplated nor what the thought would happen.  But until they change the actual rules, it is absolutely not improper, and for one last time I'll say it, THE DOL (reluctantly) AGREES !

[austin3515]

We'll just have until they issue a set of FAQ's about how we should go about filing 5500's for our clients.  

[Bird]

On 6/15/2018 at 3:06 PM, Larry Starr said:

Was it filed? Yes. 

Was it filed by the Plan Administrator?  No.

[Larry Starr]

7 hours ago, Bird said:

Was it filed by the Plan Administrator?  No.

Where does it say it has to be "filed" by the plan administrator (whatever "filed" might mean).  What it says is that the credentials must be attached and if they are, that is considered filed by the plan administrator. When your accountant electronically files your return (personal, corporate, whatever), do you not think the taxpayer has filed it? Legally, for all court issues, he has.  That's good enough for me.

[Bird]

We're going in circles Larry.  Lack of further discussion doesn't mean I agree.

Ed

[shERPA]

Larry sort of hijacked the thread.  Setting his unique process aside, back to the OP, if a client returns a Docusign-signed 5500 to the TPA, is this sufficient for the client to file with EBSA using the "normal" process where the TPA files and  a pdf of the "signed" 5500 is attached. 

Note to Larry - we know about your objection to the term "TPA", so you don't need to bring that up here! 

[austin3515]

In 33a of the above-referenced Q&A it says:

In addition, the plan administrator, employer/plan sponsor, or person authorized to sign on behalf of the DFE, including the “jurat”, must manually sign a paper copy of the completed Form 5500 or 5500-SF, as applicable, and the service provider must include a PDF copy of the manually signed Form 5500 (without schedules or attachments) or 5500-SF as an attachment to the electronic Form 5500 or Form 5500-SF submitted to EFAST2.

Oh well...  If anyone knows what a "jurat" is let me know. One time I called a guy a "jurat" in a bar and had a black eye before it was all done!  I think he didn;t like me from the get-go once I told him I was an international man of mystery - he was not the least bit impressed! 

[Larry Starr]

11 hours ago, Bird said:

We're going in circles Larry.  Lack of further discussion doesn't mean I agree.

Ed

Agreed! :-)

[Larry Starr]

1 hour ago, austin3515 said:

In 33a of the above-referenced Q&A it says:

In addition, the plan administrator, employer/plan sponsor, or person authorized to sign on behalf of the DFE, including the “jurat”, must manually sign a paper copy of the completed Form 5500 or 5500-SF, as applicable, and the service provider must include a PDF copy of the manually signed Form 5500 (without schedules or attachments) or 5500-SF as an attachment to the electronic Form 5500 or Form 5500-SF submitted to EFAST2.

Oh well...  If anyone knows what a "jurat" is let me know. One time I called a guy a "jurat" in a bar and had a black eye before it was all done!  I think he didn;t like me from the get-go once I told him I was an international man of mystery - he was not the least bit impressed! 

As a notary, I deal with both jurats and with acknowledgements. The vast majority of notarizations are simply acknowledgements.  Rarely do I have to provide a jurat.  Here are the differences from the notarization standpoint.

Jurats

A jurat is used when the signer is swearing to the content of the document.  The notary must administer an oath or affirmation to the signer in order to complete the jurat. A jurat also requires that the signer signs in the presence of the notary. It is possible to glean this information from the jurat certificate its self.  The wording states “Subscribed and sworn to before me…” – subscribed meaning “signed” and sworn meaning that an oral oath or affirmation was given.  “Before me” means that both were done in the presence of the notary public.

Acknowledgements

An acknowledgement is used to verify the identity of the signer and to confirm that they signed the document.  They are not swearing to the truthfulness or validity of the document, they are simply acknowledging that they signed the document.  For an acknowledgement in the state of California, a signer is not required to sign the document in the presence of the notary public, but they are required to personally appear in front of the notary to confirm their signature.

While it is important for a notary to understand the difference between the two, California notaries public are not allowed to determine which type of certificate a signer uses.  To do so would be considered practicing law without a license. A Notary can only ask the signer which form they prefer; if they don't know, the notary will refer them to the originator of the document for an answer.

Now, a Jurat can also be a person, which is probably how it is meant in this circumstance (a sworn "officer" who is swearing that the content is correct as far as he knows it - under penalty of perjury stuff).

2. a sworn officer; a magistrate; a member of a permanent jury.

Of course, this is probably more than anyone want to know! :-)