Frequently Asked Questions


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

A: Recordkeeper is the term traditionally used for the plan’s Investment platform & often the custodian of plan assets. Some of the Recordkeeper’s responsibilities are to value investments on a daily basis by contribution source, executes employee trades, provide employees with statements & online account access, process distribution checks, etc. The TPA is responsible for creating optimal Plan Design & performing the annual Compliance Administration. Annual administration includes performing discrimination testing, calculating and allocating Employer contributions, creating the 5500 form, maintaining legal documents, etc.



Q: Should I select a TPA over a "bundled" provider? Is it more expensive?

A: Since TPAs are specialists in the above mentioned services, they provide greater support, flexibility and expertise at a lower cost to Employers. Especially in the <$20 Million plan market, most “bundled solutions” treat administration as an after-thought; because of this their personnel receive very little training, turnover is high & traditionally the service model is a team approach. Additionally TPAs can construct very specific plan design scenarios that benefit Employers in a number of ways. If a Recordkeeper becomes too expensive or service declines, the Plan can still retain the TPA making the transition easier & the service consistent.



Q: What questions should I ask any TPA before choosing them?

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?
  • Talk me through pricing; how did you come up with these costs or is pricing generic?
  • What is the WEAKEST part of your firm as it relates to 401k administration? (yes - ask weakest!)


Q: What goes into choosing the right plan design for my company?

A: This question usually begins by looking at what the company is trying to achieve. One end of the spectrum for a 401(k) plan goal might be to reduce the tax burden of company Executives while on the other it could be to provide a generous employee benefit to attract or retain quality talent; of course the answer is usually somewhere in between.

Balancing delicate issues like Discrimination Testing, Safe Harbor, custom matching schedules & targeted profit sharing contributions takes both art & science. Sometimes compromises must be made when plan design features are at odds with each other. It takes a skilled & experienced consultant to spot these challenges before they happen. There is also the issue of practicality; features like automatic contribution increases are very popular with large plans but if your HR Manager also does accounting & acts as office manager, will they have time to effectively operate a complicated plan feature?