Ethics for the TPA Business Owner
ASPPA News from The Field
2012 Women Business Leaders Forum
Charlotte, NC (June 14, 2012)—Regina Farmer, an attorney in the law firm of Ferenczy + Paul LLP, spoke to women business leaders at a general session at the ASPPA Women Business Leaders Forum regarding ethics for the Third Party Administrator (TPA) business owner. Farmer explained that ethics are principles we live by; our reaction to certain situations. The most important thing leaders should do is to take the time to think about the issue and situation before making a decision on how to react.
In the TPA environment, ethical behavior is governed by a professional organization, such as ASPPA or the ABA, and by a governing entity such as the IRS. Circular 230 contains ethical rules to which individuals holding the ERPA designation and other tax professionals are subject. In a review of the rules under Circular 230, Farmer indicated that TPAs have an obligation to provide accurate and timely information when requested by the IRS. Other obligations include exercising due diligence in the practice, charge reasonable fees, and communicate to the client any known omissions or errors.
Circular 230 also indicates that the TPA has the responsibility to return to the client all records that were provided by the client. This is especially important to note when there is a dispute with the client. Additionally, TPAs have the obligation to clearly communicate the terms of the engagement. Farmer stressed the importance of putting everything to the client in writing.
ASPPA’s Code of Conduct contains similar rules as Circular 230 but also includes the requirement of having the skills and education to do the job as promised. Farmer explained that if a TPA provides service primarily for defined contribution plans, then the TPA may not want to consider providing service for an ESOP plan without the required expertise. Additionally, ASPPA’s Code of Conduct provides that confidentiality be maintained at all times. Farmer stressed the importance of this especially when moving data through client portals.
When conducting business, Farmer suggests that leaders within a TPA firm should always consider reputation, risk tolerance, and personal ethics when making any decision. Finally, refer to Circular 230 and the ASPPA Code of Professional Conduct for guidance whenever further clarification is required about ethical conduct.
—Marie Shebuski, QKA
Senior Operations Manager
Rehmann Retirement Builders, Lansing, MI
ASPPA Member since 2001
Category: Member Focus
