With plan administration, there are so many mistakes that can be made and most of the time, it’s the fault of the plan sponsor and the third party administrator (TPA). However, there are many times were the error so explicit, that the TPA has no excuse to let things go without trying to let the plan sponsor that the bleeding needs to be stopped.

For example, not filing a Form 5500. How many plan sponsors don’t file a 5500, even if one might actually have been prepared by the TPA. Regardless of whether the TPA prepare it or not, they should be on notice if the plan sponsor fails to timely file the 5500.

Same can be said about late salary deferrals. If a 401(k) plan sponsor has gone a few months without deferral deposits, shouldn’t the TPA let the plan sponsor know? As Sarah Palin would say: “you betcha.”

Yes, it’s the plan sponsor’s fault, but a good TPA can’t just stand out there as an innocent bystander.