Pension law is extremely complicated -particularly when an employer's circumstances change. An untrained data entry clerk cannot analyze new contingencies or spot minor problems that arise during routine administration, and minor problems often grow into major ones if not caught early.

 

Ideally, of course, every plan would be simple enough for non-professionals to administer: your business could grow at a steady rate, and your employees could stay with you until they retire. The reality, however, is that employees come and go, and businesses that grow in spurts do not always have the cash to make the contributions required under the plan. The realities of modern business virtually guarantee that situations will arise that require legal advice. Firms without staff attorneys will have to hire outside counsel to handle even simple problems, and firms with nonprofessional administrators may not even spot these problems in time to fix them without great expense.

 

To further complicate matters, the laws governing benefit plans are constantly changing. That is why successful companies count on attorneys and trained administrators to stay abreast of new developments and regularly review the plan to determine if it needs updating or if new tax breaks could be taken advantage of more effectively. A firm without staff attorneys may postpone or skimp on such reviews in order to keep costs down. The danger is that your plan may gradually become obsolete or even lose its tax qualification altogether - a very costly result.

 

Another advantage of staff attorneys is their ability to step in quickly should the plan be sued. Employee benefits law is a growth area for plaintiff's attorneys, and the number of frivolous complaints filed each year is on the rise. The possibility of unexpected litigation is not great enough to outweigh the benefits of implementing a plan, but it does require efficient damage control. A nonprofessional administration firm may not have adequate expertise to hire the best legal help for you, and even if it does, an outside attorney will have to spend precious, costly time becoming familiar with your case.

 

A final reason to avoid nonprofessional administration is the potential liability that could be placed on you, the plan sponsor. Should your plan lose its tax qualification for any reason, you could be held accountable to your employees for their loss of the tax benefits, which could run into the hundreds of thousands of dollars. Even if the loss of qualification was not your fault, you might be found to have acted improperly in delegating your administration responsibilities to nonprofessionals. If instead you hire professionals such as TPC to administer the plan, the chances are much lower that you will be blamed for plan shortcomings are significantly reduced. The liability would effectively be shifted to your professional administrators.