Prior plan shut down when merging into a PEP

When a plan in merges into a PEP, as we know, it needs to  be shut down with a final year compliance testing and 5500 filing. 

It has become more common where as soon as the current TPA is notified of the intent to merge into the PEP, they stop their service and fail to complete the final testing and 5500 filing.

What recourse does the client have to ensure the current TPA completes the shut down, especially since the fees have been paid for that service ?

Besides the new TPA completing the final work, are other solutions available ?

Thanks for your time.

4 hours ago, Keith Lowery said:

It has become more common where as soon as the current TPA is notified of the intent to merge into the PEP, they stop their service and fail to complete the final testing and 5500 filing...Besides the new TPA completing the final work, are other solutions available ?

We see this way too often, and have started defaulting to completing the work for the client unless the prior provider affirm that they will do it and provide a timeline for the work so that we can make sure it gets done.  No matter who is responsible, the client wont be happy when they have to pay penalties a year or two later.  It takes more time to do damage control, so we have opted to do it during the takeover.

About 30-40% of our takeovers come from MEP/PEP providers, and they are usually the better ones to work with (with some notable exceptions)

4 hours ago, Keith Lowery said:

What recourse does the client have to ensure the current TPA completes the shut down, especially since the fees have been paid for that service ?

As for recourse, there is no easy answer.  Is there a service agreement? What is in the service agreement?  Does it spell out the responsibilities of each party? Does it detail the fees, how it will be billed, and what happens when services are terminated? Unless your takeovers come from pretty much the same place, every situation is going to be different.  

Are you having a hard time getting information from prior providers?  We have noticed that there are a few big providers (who will remain nameless) that are getting more and more difficult to work with during the takeover process.  

RatherBeGolfing....thanks for the response and feedback !  We are seeing this issue more and more and do have difficulties in obtaining prior reports.  

Plus this just adds additional work on the already full plates of our Consultants.

In the year the stand-alone plan joins the PEP, are you running two short plan year compliance tests, one for the final stand-alone plan and one for the period of time when they join the PEP through year end?

In the year they join a PEP, are you collecting three census data from the employer - stand-alone period, PEP period, and annual data?  

If they want us to do the final work, we will request the census for that short year, and then also the short year for the time they joined the PEP.  We do not request an annual census.

4 hours ago, Keith Lowery said:

If they want us to do the final work, we will request the census for that short year, and then also the short year for the time they joined the PEP.  We do not request an annual census.

 

Yes - I wasn't thinking, both short periods can be combined for an annual census.  Thank you.