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Do TPAs get malpractice insurance?


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Do some third-party-administrator businesses get malpractice or errors-and-omissions insurance?

Without saying anything about how much the premium is (or what coverage limits are available):

Which errors are insured?

Does it include incorrect or incomplete advice (or a failure to advise) about the Internal Revenue Code?

Does it include incorrect or incomplete advice (or a failure to advise) about ERISA’s (nontax) title I?

Which errors are not insured?

Which liabilities are excluded?

(My query does not relate to any client; it’s to support my charitable and educational work with young people preparing to enter the business.)

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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On another note Peter - (not that a TPA wouldn't anyway) - but we found that most of the big 401(k) vendors (i.e. American Funds, VOYA, Empower, John Hancock, etc.) required us as TPA to have E&O insurance or we couldn't service plans on their platform.   That's been the case for quite some time.  We are a small non-selling TPA.

 

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pmacduff thank you for the further information.

That a recordkeeper requires a third-party administrator to have insurance is part of a general trend.

For example, custodians available to independent investment advisers require an adviser to maintain professional liability/errors-and-omissions insurance and cybersecurity insurance.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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