Ever feel overwhelmed by the idea of managing a retirement plan that not only fits the needs of your organization, but one that also benefits all your employees? You are not alone! Many employers, specifically in the tax-exempt community, experience this same feeling. Lucky for you, full service TPA’s like ADMIN Partners, LLC. exist for this exact reason. To further explain why a plan needs a full-service TPA, we decided to create a series that looks into TPA’s and the value they bring to a retirement plan.
For those who are not familiar with a TPA, there are two common questions they need answered: What is a TPA and what does a TPA do? These may seem like obvious questions, but for someone who is new to the world of retirement planning, they are crucial questions to know the answers to.
A TPA is simply defined as a third-party administrator for a retirement plan. It is important to know that just because they are an administrator does not mean that they are necessarily taking on the role of plan administrator. In fact, that role is often filled by the plan sponsor who is an employee of the company itself. Therefore, the Sponsor still owns a generous amount of responsibility to the Plan. One might think of it more like a partnership where the Plan Sponsor holds fiduciary responsibility to the Plan and the TPA oversees all aspects of the Plan to ensure they remain in compliance.
While the definition of a TPA is straightforward, their role in terms of your retirement plan is much more complex. A TPA will handle the fundamentals of the retirement plan: the nitty gritty if you will. Specifically, a TPA should be assuring that the plan itself remains qualified under the Internal Revenue Code. The rules and regulations put in place by the IRS are complex and consistently changing. This can often make administering a retirement plan arduous for a Plan Sponsor and can distract from the overall mission of the company. Most notably, a TPA helps a plan design a document that meets the needs of all eligible employees and benefits those who contribute to the plan. The TPA will also alleviate the administrative burden by tackling the annual demands of a retirement plan such as contribution remittance, recordkeeping, maintaining distribution activity, and year-end compliance testing.
Do you have more questions about how you can better manage your retirement plan? Feel free to reach out to us anytime by calling us (toll free) at 8 7 7 – 4 8 4 – 4 4 0 0 or via email at [email protected].