Retirement plans don’t usually make headlines at brunches or group chats, but for companies who offer company-sponsored plans they are an integral component of attracting and retaining top talent. To maximize its effectiveness and compliance with regulations, third party administrators (TPAs) provide essential oversight services.
TPA stands for Third Party Administrator and refers to an organization that handles day-to-day aspects of retirement plans for businesses. You, as the plan sponsor (your business), hire them to perform various administrative functions including document preparation and compliance with IRS/DOL regulations as well as participant transactions processing, annual nondiscrimination testing preparation and filing reports and filings on your plan’s behalf.
TPA firms frequently act as consultants for plan sponsors in making the best decisions for their business and retirement plan. Their extensive knowledge of regulatory requirements and experience across multiple plans helps guide smart choices about plan design, investment options, fee structures etc.
TPAs work closely with various providers to ensure your plan runs efficiently. They work closely with recordkeepers, investment advisors and auditors to make sure every aspect of retirement works smoothly together, while keeping participants up-to-date on plan changes or providing answers for any questions that arise.
At one time, recordkeeping was generally handled separately from TPA services; today however, many TPAs offer “bundled” solutions which combine recordkeeping and administration services into one solution. No matter which TPA solution is selected – either “bundled” or unbundled – their tasks remain the same: providing a summary plan description, processing participant transactions, conducting nondiscrimination testing and filing government filings such as Form 5500.
As retirement plan regulatory requirements become more complex, TPAs have become an invaluable resource for both large and small companies alike. Selecting an ideal TPA can save time and money while guaranteeing that your retirement plan operates legally.