TPA Signing the 5500 as Plan Administrator

If the Plan Sponsor specifically names the TPA in their retirement plan's plan document as the Plan Administrator for purposes of signing Form 5500, can we entirely avoid having the Plan Sponsor sign the 5500 or any authorizations to file at all?    

My hope is 'yes' and then we can modify our 5500 process to just provide a copy of the filing with the Plan Sponsor for their records and the SAR for them to distribute to their participants.   Could this signing authority also extend to the SSA filing?

As it stands now, we file 'on behalf' of the Plan Sponsor who signs the 5500 and signs authorization for our firm to file.   I'd like to eliminate all of this back and forth, eliminate plan sponsors' signatures being out on EFAST2 and just streamline the entire process.   I'm completely comfortable with our firm signing since we very closely monitor deposits, review in detail for late deposits, review participant census ongoing and the like.

Anyone's POV on this and what they do would be greatly appreciated.    Thank you,

"Plan administrator" means the ERISA 3(16) plan administrator. That entails a lot more than just signing the 5500.

If you want to know more, is just so happens that Ilene Ferenczy is doing a free webcast in less than a couple of hours from now on this very topic. You can register at http://www.erisapedia.com/webcasts

1 hour ago, C. B. Zeller said:

"Plan administrator" means the ERISA 3(16) plan administrator. That entails a lot more than just signing the 5500.

Maybe.  The 3(16) Administrator may be engaged for only some of the general Plan Administrator duties, as long as they are spelled out.

We had a 3(16) product where we would do SOME of the 3(16) duties and not be responsible for the others.  We added plan language that "OUR FIRM will be considered a 3(16) Plan Administrator as outlined in attached 'NAME OF ADDENDUM'."  In the Addendum, it outlined the the items we were responsible for such as signing the 5500; approving distributions, loans and hardships; and a few other things.  It was noted that our firm was ONLY responsible for the items on the list and the Plan Sponsor, acting as Plan Administrator would be responsible for other duties of PA (or delegating those duties to another 3(16) administrator) such as distributing required notices, tracking eligibility, etc.

Even with a perfect allocation of responsibilities between or among the administrators, remember that ERISA § 405(a) imposes some co-fiduciary responsibilities regarding any other fiduciary’s breach.

If a fiduciary “has knowledge” of another fiduciary’s breach, the observing fiduciary must “make[] reasonable efforts under the circumstances to remedy the breach.”  ERISA § 405(a)(3).  In doing so, the observing fiduciary must use no less care, skill, prudence, and diligence than an experienced fiduciary would use.

CLE401kGuy:

I would certainly get a separate 3(16) Service agreement in place.  Make it air tight--dot your t's and cross your i's.  Get your counsel to sign off on it.

If you are being paid extra for that, be careful of prohibited transactions.  Especially, if the fees may come from the plan.

4 hours ago, CLE401kGuy said:

If the Plan Sponsor specifically names the TPA in their retirement plan's plan document as the Plan Administrator for purposes of signing Form 5500, can we entirely avoid having the Plan Sponsor sign the 5500 or any authorizations to file at all?    

My hope is 'yes' and then we can modify our 5500 process to just provide a copy of the filing with the Plan Sponsor for their records and the SAR for them to distribute to their participants.   Could this signing authority also extend to the SSA filing?

As it stands now, we file 'on behalf' of the Plan Sponsor who signs the 5500 and signs authorization for our firm to file.   I'd like to eliminate all of this back and forth, eliminate plan sponsors' signatures being out on EFAST2 and just streamline the entire process.   I'm completely comfortable with our firm signing since we very closely monitor deposits, review in detail for late deposits, review participant census ongoing and the like.

Anyone's POV on this and what they do would be greatly appreciated.    Thank you,

See the comments above.  Its a lot of potential issues with very little return for you.  You are probably better off streamlining/automating the back and forth for signed documents.

I listened to that webinar mentioned above, very interesting.  The speaker was easy to listen to and it was clear she knew her subject.  After listening to the webinar I don't think I would venture into accepting 3(16) responsibilities.  She talked about putting your 3(16) responsibilities in your service agreement and ways people try to insulate them self from 3(16) liability.  At one point the cons outweighed the pros and I concluded it's not worth it. 

I am learning that some clients are beyond not involved and feel that the work you do for them can wait, frustrating. The only reason I would consider taking on any 3(16) responsibility is why this post was started by CLE401kGuy... to speed up the process of getting a form 5500 signed and filed timely. 

I bet it will be listed for others to review   ->Erisapedia Webcasts

The short answer is Yes, you can sign the 5500 if you are named as the Plan Administrator in the plan document.  With that being said though, you should consult with your ERISA attorney, make sure that your service agreement is clear on the duties you have taken on, and make sure that you have systems (and insurance) in place to deal with your 3(16) responsibilities.  You may also want to review IRS form 8822-B.

And get your ERISA lawyer's advice about whether a fiduciary role, however limited, requires ERISA fidelity-bond insurance.

On 11/4/2021 at 4:30 PM, BG5150 said:

CLE401kGuy:

I would certainly get a separate 3(16) Service agreement in place.  Make it air tight--dot your t's and cross your i's.  Get your counsel to sign off on it.

If you are being paid extra for that, be careful of prohibited transactions.  Especially, if the fees may come from the plan.

No such thing as an "airtight" agreement.  As pointed out, co-fiduciary liability will easily trump any limitation of liability language in an agreement.  We're becoming a "limited" 3(16) service provider (bundled recordkeeping) and it scares the bezeesus out of me.  The language we use (approved by outside counsel) is that in a pinch, the plan sponsor reassumes responsibility.  But we are still a fiduciary, so we're responsible for their misdeeds when that happens.  No win.  Just a risk to assume.

16 minutes ago, MoJo said:

No win.  Just a risk to assume.

If the revenue you derive from the 3(16) Service outpaces the fiduciary insurance premiums and covers the cost of the extra work with some profit at the end of the day, then I think it could be a win.

6 minutes ago, BG5150 said:

If the revenue you derive from the 3(16) Service outpaces the fiduciary insurance premiums and covers the cost of the extra work with some profit at the end of the day, then I think it could be a win.

Until that "one" issue that costs you your reputation....  No insurance covers that.

I don't see how you possibly add enough revenue without going deep into 3(16) services.  Certainly not enough for the potential risk you are taking on.  Even less feasible for a smaller provider that isn't already staffed to keep up with the policy decisions, education, and training that comes with it.