The name “Third-Party Administrator” (TPA) does not precisely express the job. Instead, a more suitable phrase would be “Retirement Plan Specialist” (RPS). An RPS is a person or entity responsible for the day-to-day plan operations and administration of your plan. They:
- Design your plan according to your organization’s goals and objectives
- Perform government-required non-discrimination testing
- Prepare required IRS Forms, such as Form 5500 and Form 899-SSA
- Manage and upkeep your plan documents
- And much more!
With that out of the way, back to the big question: What separates a great RPS from mediocre one?
A Great RPS Understands That Communication is Paramount
They communicate timely and effectively with their clients. They have the necessary know-how and planning experience to understand your goals for the plan, which includes understanding your company demographics (financial size, number of employees, age of owners and key employees, etc.). They collaborate and work with your financial advisor, CPA, or other professionals making the whole process seamless.
A great RPS meets with the client at least once a year with a clear agenda. This provides an opportunity to discuss services as well as any changes.
A Great RPS Possesses Proper Knowledge and Expertise
In an industry that is constantly evolving, with new laws and government guidance, they stay up to date on education. They tell you what you need to know. They explain the pitfalls in your plan, how to avoid them, and explain those pitfalls well enough that you understand their recommendations.
Further, a great RPS has proper industry credentials. The organizations, such as American Society of Pension Professionals & Actuaries (ASPPA), that award these designations have strict guidelines for eligibility. They often require years of study and experience, similar to an advanced university degree. These programs are time-consuming, rigorous and expensive, but they provide a level of training you simply will not gain through experience alone. Ultimately, a knowledgeable RPS can guide you toward a modern and streamlined plan.
A Great RPS Uses “Kaizen” Method
Kaizen is a combination of two Japanese words: Kai (change) and Zen (good). A great TPA uses kaizen methodology to push forward continuous improvement of your retirement plan. Should your plan contain Roth after-tax feature? How about Auto Enrollment? Is there a way you can increase employee participation? They proactively review your plan on an ongoing basis and recommend changes.
Final Words
When it comes to managing your employee retirement plan, it’s critical that you work with the right Retirement Plan Specialist. They should know your business, your organization size and your goals and objectives so they can continue to tailor your retirement plan based on your needs. After all, your employees work hard to fund their retirement so they can have a secure financial future.
This is for educational purposes only. The information provided here is intended to help you understand the general issue and does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your company’s benefits representative for rules specific to your plan.
About the Author
A 15-year veteran in all aspects of workplace retirement plan benefits program, Mizan J. Rahman is on a mission to help hard-working Americans enjoy a meaningful financial future. He specializes in the compliance, administration, design, and legal documentation of 401(k), 403(b), and 457(b) plans. Mizan provides high-level, personalized consulting to small businesses and not-for-profit organizations. One of the select few to have been awarded Enrolled Retirement Plan Agent (“ERPA”) by the Internal Revenue Service, Mizan regularly represents clients in front of DOL and IRS during audits.
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