Keeping an Eye on Your 401(k) Service Providers

Jennifer Moore CPA

Towards the end of last year there were several news stories covering the FBI’s raid of Vantage Benefits Administrators, Inc., a Dallas-based third-party administrator. Since that raid, there have been lawsuits brought by plan sponsors filed against Vantage, Vantage’s President Jeff Richie and his wife, advisors who referred the plan sponsors to Vantage, and Matrix Trust Company, who served as trustee for several of these plan sponsors. You can read more about the cases here and here.

The atrocity of the alleged transgressions brings to light one manageable suggestion for plan sponsors– keep an eye on your service providers. The easiest way to do this is to compare the information you receive from all of them – let’s look at an example for why. One company bringing suit, MBA Engineering, was not receiving monthly trust statements from Matrix. Allegedly, Vantage was directing transfers out of the plan into a bank account in its own name and then fraudulently reporting participant statements and website information to make it appear as though the plan was whole.

Let’s pretend everything happened as alleged. Obviously, MBA didn’t have two sources of data to compare, because of the missing trust statements, but imagine if they did – Vantage’s information would show everything as hunky-dory. On the other hand, Matrix would show substantial distributions to a Vantage bank account. Huge red flags! Ring the alarm bells!

This comparison of information serves to keep everything in check, and it’s the bedrock of our new 401(k) auditing software – Autire. The first tests that kick off in Autire reconcile data from the three big data sources in 401(k) plans: the plan sponsor’s payroll information, the administrator’s participant data, and the recordkeeper’s investment data. We built it this way to ensure verification of accuracy. Take note – if it’s good enough for the auditors, it should be good enough for you! Visit us at www.401kcpas.com to learn more about Autire.