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Shane Roberts August 10,2015

What Is a Retirement Plan TPA?

Retirement plan TPAs (Third-Party Administrators) assistemployers in managing their employee retirement plans. Thistakes away a lot of the stress and work associated with designingand implementing a company-wide retirement plan. A TPA alsoensures that you (the Plan Sponsor) are in compliance with alllegal regulations for your organization’s employee retirementplan.

Keep reading to learn what a retirement plan TPA does andwhether you should hire one.

What Does a Retirement Plan TPA Do?

Companies with employee retirement plans often hire a retirement plan TPA to deal with various aspects of their ERP.A TPA acts as both a consultant to advise employers on the design and legality of their retirement plan, as well as aliaison between the Plan Sponsor (the employer) and the record keeper who holds the plan’s assets.

Benefits of Hiring a TPA

There are two main benefits of hiring a TPA:

1. Makes sure your plan complies with the complex employee retirement plan legal requirements set by theDepartment of Labor and Internal Revenue Service

2. Helps you create a well-designed plan that both makes employees happy and meets company goals

A smartly executed employee retirement plan that fulfills all legal obligations can ultimately reduce employer costs —depending on plan design, the company owner can save more in income taxes than it pays out in plan contributions.You could also save costs in the form of potential lawyer bills and penalties incurred by having an employee benefitplan that doesn’t meet DOL and IRS requirements

Do I Need a TPA?

Not every retirement plan sponsor needs to hire a TPA — some employers have “bundled” plans, where the recordkeeper (the 401k plan custodian) both holds the plan assets and implements the plan design. Whether you need tohire a TPA will depend on various factors, such as:

Whether your plan’s record keeper will give you a discount if you use TPA services

Whether your plan’s record keeper is responsive to questions regarding plan compliance

How knowledgable about design, legal responsibilities, etc., your record keeper is

This short article from 401khelpcenter describes some specific TPA services and might help you determine if youneed to hire a TPA. Those in Salt Lake City or Logan, Utah can also contact us to discuss whether your plan wouldbenefit from a TPA.

How Much Does a Retirement Plan TPA Cost?

This depends on the scope of your plan and the TPA. At Cook Martin Poulson, we base fees on the number of eligibleplan participants, combined with a base fee. For example, depending again on the specifics of your particular plan, wemight charge a base fee of $650, plus $15 for each eligible plan participant.

Conclusion

An employee retirement plan provides a lot of value for employers. Not only does it foster a sense of loyalty amongemployees, but it can also save employers money in the form of tax deductions. It’s important, however, that your planis managed by an expert who will make sure the plan minimizes employer costs and is in compliance with federallaws.

To learn more about you could benefit from our SLC TPA services, check out our retirement plan TPA services page,which has further information and FAQs.

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