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.
Because there are so many TPA firms in the industry, choosing one that works for your retirement plan can be a bit staggering. How can you be sure that the TPA you are considering is going to give your plan the support it needs? Here are a few things to consider when choosing a TPA.
In the world of TPA’s you will often find that there are two types of firms out there: full-service TPA’s and free TPA’s. While we know the sound of ‘free’ may be enticing, more often than not, those free TPA’s cannot provide the quality of service as those TPA’s in the full-service realm. A full-service TPA is going to provide you things like contribution remittance, recordkeeping services, plan document design (and amendment services), and they will also be able to handle your compliance testing if you are not ERISA exempt. Make sure you are aware of what your plan needs are and ask questions when considering a TPA for the job. You should be confident that they can back you, the plan sponsor, in the administration of the plan and that they can support the plan if it were to face an IRS audit.
When working with a vendor to help you select the investments for a retirement plan, you may come across some firms that include TPA services. Therefore, the TPA itself is simply a division of the investment company. Naturally, this will often lead to you being pressured to use the investment firm for both the assets and the TPA business. This sounds like a nice all-in-one solution; however, this can tend to create a conflict of interest when it comes to the plan and can also limit the plan in their options. It is important to understand that you are not required to use a producing TPA firm. In fact, there are lots of TPA’s (like ADMIN) who are non-producing and are vendor neutral. This means they will allow the plan to use any vendor company that fits the needs of their plan while still providing the same level of service on the document and recordkeeping side.
If your organization has an existing retirement plan, it is possible that you may have current investments that are obligated to stay with the existing vendor company for a certain length of time. Therefore, if you decide you want to change investment companies, you will ultimately be preserving assets at more than one vendor. In this situation it is imperative that you find a TPA who can properly support all of the assets, including the legacy ones. Recordkeeping assets at multiple vendors along with the historical distribution activity from each firm is essential in terms of keeping a plan in compliance. While most TPA’s may say that this is something they can tackle for you, be sure to thoroughly explore their process on legacy assets as it can be an intricate process to manage.
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].