Timely Enrollment Errors - Who is Monitoring

Hi to All,

If you saw the John Hancock webinar today on the EPCRS program and how to use it, you will understand where my questions originate.  There was a lot of coverage of enrollment errors and the corrections seemed quite complex.  Actually I should have said that the corrections themselves are not that hard, once you can identify what kind of error it is, what kind of money is involved, how long ago the error occurred, whether or not automatic enrollment is a factor, etc.  That's the harder part - figuring out which kind of error you have.  My question is, how would I even know an error had occurred, and ultimately, who is responsible for figuring it out and correcting it?

Our non-producing TPA shop does traditional, annual reporting for retirement plans of small employers.  We are not usually involved in periodic enrollment meetings after the plan is established. Unless the employer volunteers the information or the participant complains to us, we would never know if someone was enrolled late.  If the employer distributes an enrollment kit in May to someone who was eligible on January 1, and that person starts deferring on June 1, all I will ever see is the total deferred for the year and the total compensation for the year from the return of the annual census data.  I don't ask and I am not given any data about when participants begin deferring.  I suppose I could go look at each new person in the plan, if a platform like a John Hancock is involved, and see when deferrals commenced but even then, I wouldn't know if the person initially declined and then changed his mind later on.

What are the rest of you doing?  Are you closely involved with the enrollments of your client's employees?  Do you collect copies of the enrollment forms or the forms declining the opportunity?  Is this your responsibility as a TPA?  Do you rely on the investment advisor to be on top of this?  Outside of informing the client and the HR department (if any) of their responsibilities when the plan is first installed,  do you follow up to see if procedures are actually being followed?

My colleague here says he has done these corrections a number of times over the years, but it was because a savvy participant complained about not being enrolled properly, not because he as the TPA discovered the error or because the employer let him know there was a problem.  I could probably count on one hand the number of times I made these calculations and it was so long ago I don't even remember the circumstances.

We would like very much to know how other firms are handling this issue.  Thank you.

I think most non-producing, non-fiduciary TPAs are similar to yours. For that type of TPA, often the TPA service agreement will often address the client's responsibilities, including who communicates what to the participants, who determines eligibility etc. 

I do these types of corrections regularly - but usually it is because someone other than me has spotted it. A new advisor, or CPA, etc might notice that the plan is out of compliance, and this will often be one of several things that need fixing, so they find a TPA that can help. Internally, we occasionally notice it when an employer turns in a census and only the HCE or principals are making deferrals. In which case we try to confirm that really is accurate. The converse can also raise the question. If everyone on the census is deferring, that might be unusual, so we would try to confirm that the employer actually reported ALL employees to us. If they didn't, sometimes it is because they don't think certain people are eligible, and they don't have to be included. If that's the case and the employees were eligible, you would have a missed opportunity to defer. 

I would say a TPA that is providing additional services (enrollment meetings, 3(16), etc) would have a different process for catching these kinds of failures. 

Hi justanotheradmin, thanks for your reply.  I feel a little better.  I do a separate email to my clients each year, not at peak time when everything else is going on, and I remind them of what their eligibility requirements are and that it's their responsibility to enroll people timely.  I also tell them to obtain and keep documentation on those employees who decline to make salary deferrals.  I think this year I will add something letting them know (if they don't already) that corrections have to be made if someone is omitted and to let me know if they find that someone was inadvertently left out, or if their directions were not implemented.

I don't know what our service agreement specifies about this but I will find out.