10 Things to Look for in Retirement Plan Administration

401(k)’s and other retirement plans can be very complex and highly technical, potentially making retirement plan administration burdensome for employers. But by working with a highly skilled Third Party Administrator (TPA), employers can be supported in these tasks, assured their plan is running smoothly, and in compliance with ERISA and IRS regulations.

Choosing the right TPA for your retirement plan is a critical decision that can significantly impact your plan’s success. Here are key factors to take into consideration when choosing a TPA.

  1. Expertise and Experience
  1. References and Reputation
    • Be sure to read reviews and testimonials or seek recommendations from other plan sponsors or financial advisors. Kushner & Company publishes some of their client testimonials.
  1. Compliance and Regulatory Knowledge
    • Ensure the TPA has a deep understanding of ERISA and other relevant retirement plan regulations.
    • Be certain that your retirement plan administrator has experience working with the IRS and DOL
    • Determine if the TPA can file your required IRS Form 5500s electronically after you digitally sign them. For more information on IRS Form 5500s, see one of our other blog posts “Everything You’ve Always Wanted to Know About IRS Form 5500.”
  1. What Services Do They Offer
    • Determine whether they can handle the specific type of plan you have or are considering.
    • Assess the range of services offered, such as plan design, compliance testing, contribution allocations and calculations, participant notices and employee eligibility and vesting determinations.
  1. Accessibility
    • Consider the location of the retirement plan administrator and their availability for in-person meetings and consultations.
    • Are they also proficient and successful doing virtual meetings when in person isn’t feasible.
  1. Customization
    • Are they a “one-size-fits-all” shop or do they believe in tailoring services to meet the unique needs and goals of your organization and retirement plan.
  1. Security and Data Protection
    • Ask about security measures they have in place to protect sensitive participant data and financial information.
  1. Plan Sponsor Support
    • Do they advocate for their clients, supporting them in taking the complexity out of retirement plan administration, allowing the employer to focus on running their business.
    • How do they build relationships with their clients, recordkeepers and financial advisors.
  1. Responsiveness and Communication
    • Will you have a dedicated account manager or will you reach a call center when you contact the TPA.
    • Evaluate their responsiveness and how well they communicate to inquiries and concerns.
  1. High Standard of Service
    • Ask what steps the TPA takes to deliver consistently high standards of service and accuracy.

A Closer Look at the Retirement Plan Administration Relationship

To understand how retirement plan administration works, it’s important to discuss the relationship between the employer (and plan sponsor) and their participants with a well-qualified Third-Party Administrator (TPA). Because all qualified retirement plans such as 401(k), 403(b), profit sharing, money purchase, and combo plans are highly complex, choosing the right TPA is extremely important. There are many considerations, and they vary from employer to employer.

Exploring the Various Approaches Third-Party Administrators Take

Some service providers offer retirement and health and welfare plan designs and administration that are secondary to their regular lines of business. Some examples of these are large payroll companies. While they may provide outstanding payroll services, employee benefit design and administration are sometimes an afterthought. These TPAs require that the employer adopt the TPAs own pre-set plan document, often with plan features in the TPA’s (and not the employer’s) favor.

Other TPAs may operate on a GIGO (garbage-in, garbage-out) basis, incorporating employee census and contribution data provided by the payroll vendor or employer without validating that data to see if it makes sense. While there’s nothing inherently wrong with either of these TPA types, and in fact their pricing may reflect their approaches to the work that a TPA does, it often can result in serious errors with catastrophic consequences on compliance and participant satisfaction with the retirement plan administration services.

Other TPAs focus on providing a more “hand-holding” and customized approach to working with the employer and their employees. These TPAs provide custom plan designs from the employer’s desires, not the TPAs. TPAs using this model make sure that all census data is double-checked for accuracy, and ensure that all compliance aspects, including all required nondiscrimination testing and annual IRS 5500 plan filings are timely prepared. For more information, you may want to revisit our blog post covering the ins and outs of IRS Form 5500.

In short, choosing the right TPA to assist in designing and administering the retirement plan or plans for your organization and employees is one of the most important decisions you can make. As the words in the film Indiana Jones and the Raiders of the Lost Ark  say, “Choose wisely.”

Still Need Help Selecting the Right Retirement Plan Administrator?

Choosing the right TPA for your retirement plan is essential to worry-free administration and positive outcomes for your participants. Take the time to thoroughly vet prospects before making your decision. For more than 40 years, Kushner & Company has made the administration of successful retirement plans easy for our clients.

Our team of retirement plan specialists provide extensive expertise, offering complete objectivity and comprehensive solutions, taking the complications out of administering retirement plans. So, if you’re ready for stress-free retirement plan administration, we encourage you to contact our experienced team today.