Provider Fail?

May 20, 2011 (PLANSPONSOR (b)lines) - Recently a (b)lines reader sent a question to our Ask the Experts panel asking if her employer, a plan sponsor, or its 403(b) provider is responsible for the process of complying with the 2007 403(b) regulations.  The question surprised me.

Not the validity of the question, but the implication – that, four years after the regulations were passed, this plan sponsor has not taken steps to comply.  The reader explained that the plan has not been employer-controlled and participants work directly with the provider, but many 403(b) plans prior to the regulations operated this way, and many of those plans are already in compliance or moving in that direction.  

MY question is: Who was responsible for informing this plan sponsor of the regulations and getting it started on the process of complying? I know, I know, the sponsor is ultimately responsible, but I’m sure many plan sponsors that had a hands-off approach to their plans weren’t tuned into – or on the lookout for – new regulations.  

It’s possible that they have been informed and prodded, but resisted taking on the task, finally turning to “experts” that may affirm the sense that it is someone else’s responsibility. But, it seems to me that the provider failed in this situation. If it failed in nothing else, it failed in providing a service that would have forged a strong bond with this sponsor for the future and perhaps gained some word-of-mouth recognition that would have improved its reputation and perhaps attracted new clients.   

Doing a good job sometimes means doing something that is not your responsibility – or admitting that you do not have the capability to do what needs to be done, and suggesting the client seek help from someone else.