What Do TPAs Do?
The TPA works with the plan sponsor (the employer) to ensure the ongoing accuracy of the plan, minimize the time the plan sponsor has to spend on plan oversight, meet service and compliance deadlines, and coordinate with all parties.
Assure Accuracy & Compliance of Plan & Participant Records
TPAs help ensure your plan data and participant records are accurate, and assist in keeping your plan compliant so you and your employees can continue to enjoy the benefits of your qualified plan.
Generally, TPAs tend to focus on the following areas:
- Employer Calculations
- Loans, Qualified Domestic Relations Orders (QDROs) and distributions including Required Minimum Distributions
- Participant deferrals
- Vested benefits
- Reconciling each participant account and resolution of any other errors associated with participant accounts
- Independent review and reconciliation of client census
- Independent analysis of client vs. vendor data
- Oversight and monitoring of contributions, reports and fees assessed by the investment company.
- Plans operations review to ensure they are following the legal Plan Document.
- Audit support
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Plan Compliance & Regulations
- TPAs may also perform the compliance testing for the Plan. These tests are mandatory and complicated. If an issue comes up during testing, the TPA will make recommendations or provide solutions that address the issue.
- A TPA usually offers quality solutions to compliance issues because their industy experience and intimate knowledge of the plan allows them to recommend a suitable outcome.
- The TPA will maintain (and may design or amend) the Plan document to ensure the client remains in compliance with any changes in the law or regulations. Also, they will continuously review the Plan to see if it is operating in accordance with the Plan document.
If not, they make appropriate recommendations to correct the issue.
- They will also make recommendations on plan design changes when appropriate.
- They can also help to ensure the highest level of compliance on issues like loans and distributions.
- When in-depth reconciliation is not performed, it creates the possibility that errors may exist in participants’ accounts. (Under funding of participant accounts can result in penalties and interest; over funding can force the employer to make similar contributions to other participants if not rectified.) This detialed level of reconciliation is rarely performed by any other entity including the investment companies, or the Plan auditors.
- Working with a TPA is a great way to help keep your retirement plan in compliance with regulations. We can work with you to find the Third Party Administrator that fits best with the way you do business and your management style and culture of your business.
About the Author
Martin McCann is president of McCann Asset Management and is a practicing financial advisor in Fresno, California. He focuses on retirement plans and wealth management.
Martin can be reached at 559-400-6520 or Martin@McCannAM.com.
Visit the McCann Asset Management web site at www.McCannAM.com
Registered Representative of and securities offered through OneAmerica Securities, Inc., Member FINRA, SIPC, a Registered Investment Advisor, 1525 E. Shaw Ave, Suite 201, Fresno, CA 93710. 559-226-4546. Insurance Representative of American United Life Insurance Company® (AUL) and other insurance companies. McCann Asset Management is not an affiliate of OneAmerica Securities, Inc. or AUL and is not a Broker-Dealer or Registered Investment Advisor. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary or investment advice. Investing involves risk which includes potential loss of principal. Fisher Investments and KRC Research are not affiliates of American United Life Insurance Company or OneAmerica Securities, Inc. and are not OneAmerica companies.