Backdating Plan Amendments

I am advising a TPA firm that unfortunately had an employee who helped backdate a plan amendment for a plan customer. This means that the plan client and TPA missed a plan amendment deadline but backdated the signature date to be within the deadline. This happened fairly recently. The question is how to correct this. My opinion is to reach out to the plan customer and draft a new plan amendment which rescinds the backdated plan amendment. After this is accomplished I will determine through EPCRS what additional steps need to be taken. Any thoughts on this as to whether rescinding the backdated plan amendment is the right first step here and then what additional steps need to be taken, other than using EPCRS?

You raise a really good question.  Unfortunately, what the client did was fraud - plain and simple.  Two schools of though on this.  1) Since it was fraudulent, it was of no effect whatsoever, and should be "ignored."  The problem is, how does one ignore a documented issue? 2) Do as you suggest and "rescind" that amendment - but I'm not sure another amendment is necessarily the way to go.  It basically codifies for all time the fraud that occurred.  Clearly, documenting that the amendment was not a legitimate amendment to the plan would be advisable - but I would lean slightly in favor of documentation outside of the plan, that indicates why the amendment is of no effect, and then, as you say, correct the issue appropriately through EPCRS.

What was the amendment for?  It is eligible for retroactive treatment under EPCRS?

35 minutes ago, BG5150 said:

What was the amendment for?  It is eligible for retroactive treatment under EPCRS?

Keep in mind that "backdating" the signature is fraud.  Retroactive amendments are allowed under some circumstances as provided in EPCRS (but such a retroactive amendment would have a "current date" signature).

What has ERISA counsel suggested?

54 minutes ago, MoJo said:

Keep in mind that "backdating" the signature is fraud.  Retroactive amendments are allowed under some circumstances as provided in EPCRS (but such a retroactive amendment would have a "current date" signature).

I understand.  My point would have been, if the amendment is eligible to be effective retroactively, then just do a new amendment with a retro effective date and sign currently and just trash the old one.

10 minutes ago, BG5150 said:

I understand.  My point would have been, if the amendment is eligible to be effective retroactively, then just do a new amendment with a retro effective date and sign currently and just trash the old one.

Understood - that that might be the way to properly do what needs to be done, but the lawyer in me cringes when it is suggested that one "trash" the "evidence" or an already completed "fraud."  The problem here is that you never truly can trash completely something - which will exist in numerous systems and electronic vehicles forever - especially if a service provider actually implemented a change based on backdated amendment.  Will they get caught?  Probably not.  But if they do, it becomes a "conspiracy" with heightened potential penalties.

Just curious, with many service providers using, primarily or even exclusively, electronic-signature methods, how often do problems of the kind described above happen with ink-on-paper signatures rather than electronic signatures recorded in a computer system?

4 hours ago, Peter Gulia said:

Just curious, with many service providers using, primarily or even exclusively, electronic-signature methods, how often do problems of the kind described above happen with ink-on-paper signatures rather than electronic signatures recorded in a computer system?

Most of our clients use our documents and we use DocuSign for signatures - which provides no opportunity to backdate the time of signature.  If a client can't or won't use DocuSign, we accept printed, wet-signed documents, but won't accept anything obviously backdated.  We do have clients using individually drafted documents - but in those cases, their attorney is the drafter, and handles amendments - and we operate in the mode of a nondiscretionary, directed, ministerial service provider and accept what is given to us (although we may question certain things.  Our biggest problem is for takeover business, where we notice a missing amendment or other documents, and we direct them to their prior service provider to fix - and miraculously, they appear (apparently found behind a filing cabinet somewhere).  Again, unless it clearly has a "prepared" date somewhere with a signature date that predates the date it was prepared, it'll be accepted (see no evil, hear no evil...)

Mojo, thank you for the helpful information.

Ananda, I like the steps you have suggested and in addition would recommend counselling/training for the employee on the issue and documenting the training in the file.