It has never been more important than it is today to offer a company retirement plan to your employees; but doing so could potentially result in a lot of extra work. Rather than absorb the extra responsibility yourself, consider choosing a plan that’s managed by a third-party administrator (TPA). Not only will these professionals assume responsibility for keeping tabs on your plan’s necessary administrative and recordkeeping tasks, they are experts when it comes to ensuring that your plan is always compliant with a slew of ever-changing regulations.
At the end of the day, when it comes to managing a successful business, you are responsible for ensuring that the right people are on your team and that you play to their individual strengths to maximize company-wide efficiency and effectiveness. Why wouldn’t you choose to do the same when it comes to managing your retirement plan?
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Still not sure if it makes sense for you to work with a TPA? Here are five reasons why you may want to reconsider.
Hands-Off Plan Administration
Do you really have time to double-check that eligibility and participation requirements are met or to secure verification of vesting for participant distribution? Probably not. When you delegate your plan’s administrative responsibilities to a TPA, you are free to work on growing your business.
Proven Industry Expertise
Managing regulatory responsibilities that pertain to your company’s retirement plan is tough enough without the constant changes filtering down from lawmakers. It’s your TPA’s job to know what changes are coming down the pike, which can help you reduce your fiduciary liability, can help reduce potential penalties by ensuring plan compliance and can effectively act on your behalf during an audit.
Strategic Plan Design
As independent retirement plan professionals, TPAs are well-positioned to act in the best interest of your plan every step of the way. Your TPA can help you determine the best kind of plan for your business, optimize your plan design to help you accomplish your goals, and monitor your plan and present you with objective recommendations for improvements.
Stress-Free Reporting & Testing
To maintain your plan’s compliance and avoid a variety of costly penalties, you must adhere to quite a few reporting guidelines with the IRS and the Department of Labor, not to mention the necessary notices that must be sent out to your plan participants. Working with a TPA will ensure that you meet all necessary deadlines while completing any additional leg-work that would otherwise be expected of you.
Best Bang For Your Buck
When considering the variety of essential responsibilities you are expected to manage as a plan sponsor and the cost associated with noncompliance, you would be hard-pressed to find another worthwhile solution when it comes to managing a successful retirement plan. If you are still unsure if working with a TPA is the right move, call one up. In most cases, you will find that their fees are reasonable and transparent; they are generally flexible when it comes to payment; and there are great tax benefits available to help offset the costs.
Email Rea & Associates to learn more reasons why working with a TPA is an excellent move for small-to midsize-business owners.
By Steve Renner, QKA (New Philadelphia office)