Third Party Administrator
1. Plan Design
2. Reconcile Investment Reports
4. IRS annual 5500 filing
1. Investment Selection
2. Enrollment Process
3. Annual Plan & Fee Review
4. Investment Policy Guidelines
1. Platform of Investments
2. Particpant Recordkeeping
3. Enrollment Process
1. HR Coordination
2. Investment Selection & Review
3. Provide Information for Plan
4. Review all Providers
TPAs are the most important consideration in retirement plan puzzle as they connect the various pieces of the plan to create a complete picture. The plan design should meet the plan sponsors needs while at the same time maintaining the tax deferred status under the current rules and regulations. The rules of qualified plans are reasonably complex and require essential computations that include compliance testing as well as specialized contribution calculations according to complex formulas to comply with the retirement plan laws and to ensure that the plan being tested does not discriminate against non-highly compensated employees.
In addition, the TPA completes:
The role of a financial advisor is not to just pick investment options; it’s to help the plan sponsors with the fiduciary process. The fiduciary process includes the completion of an investment policy statement (IPS), periodic review and potential replacement of the investment options as compared to the IPS, and investment education and/or advice to plan participants. The best advisors typically step into a role as an intermediary between the plan sponsor and other plan providers to make sure that the plan administration is smooth and that the plan maintains its qualification.
Providers offer the actual investment and recordkeeping platform. These providers would offer the plan sponsor a recordkeeping platform whereby the employer can make contributions directly to participant accounts. The selected platform would allow the participants access to view their individual investment account and allow them to review and make changes to their investments. The provider will have a wide array of investment options for the client. With assistance from their financial advisor, the participant would be able to select from the investment options that have already been screened by the provider. Not only do they provide participant’s statements and website access but they also provide communication materials for employers to promote the plan. Most platforms also have experts in the field for enrollment meetings, annual plan reviews and ongoing communication.
Employers need to pay attention to their company’s evolving needs and the plan’s ongoing administrative operations. For a retirement plan to be effective, it must remain in step with the evolving needs of the company it serves. A plan once considered appropriate can become outdated as the company changes, grows, and matures. The employer should meet periodically with all of the providers to evaluate their plan and the plan’s providers. If the dynamics of an employer change in the middle of the year, it may be necessary to inform the plan’s providers of the changes.