Frequently Asked Questions

Q: What is the difference between a TPA and a Recordkeeper?

A: Recordkeeper is the term traditionally used for the custodian of plan assets or the planís Investment platform. Some of their responsibilities are to value investments, provide participants with statements on their accounts, process distribution checks, etc. while the TPA is responsible for the administration and compliance of the plan. Major responsibilities of the TPA include designing plans that meet their clientís needs, calculation and allocation of Employer contributions, preparation of all compliance testing, filing annual 5500 forms, maintaining documents, tracking employee eligibility, etc.

Q: Why should I use a TPA over having a "bundled" provider? Isn't it more expensive to do so?

A: Since TPAs are specialists in the above mentioned services, they provide greater support, flexibility and expertise to investment advisors and 401k sponsors. It is very cost effective for small businesses to utilize a TPA. Recordkeepers primary area of competency is in handling plan investments and not in providing TPA services to plans. Because they have more sources of revenue they are able to discount pricing beyond what a TPA charges making the whole package somewhat less expensive!

Q: What questions should I be asking any TPA before selecting them for 401k administration?

A: As many as possible but here are some biggies:

  • Are you product agnostic towards investment companies?
  • How experienced are your 401k Plan Consultants & on average how many plans do they each service?
  • What services do you provide that I won't be able to find elsewhere?
  • If I require ERISA representation for voluntary compliance or audit support, how would you handle that?
  • What is the WEAKEST part of your firm as it relates to 401k administration? (yes - ask weakest!)