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Why Your CPA Should Service Your TPA

When it comes to servicing your third party administrator retirement plan, employers have a myriad of choices in providers. However the smartest choice to service your plan could be your accounting professional. Here are a few of the advantages to this relationship.

Seeing the bigger picture. Your CPA should already be serving as your tax advisor, and for many small plans, one of the goals of the retirement plan is to serve as a tax shelter. When a plan sponsor brings their accounting professional in to service the plan, the plan sponsor receives the added benefit of plan design that keeps the plan sponsor’s goals front and center – whether that means greater tax benefit or increased retirement income for the business owner.

Understanding complex code. Retirement plans are highly regulated by the Internal Revenue Code. When your CPA administers the retirement plan, plan sponsors have the opportunity to pull all of their financial resources together under one umbrella and use the tax code to their advantage.

Potential payroll service efficiency. If the plan sponsor already receives payroll services from a CPA, depending on the type of plan and structure, the opportunity may exist to streamline retirement plan deductions. This is especially true of 401(k) retirement plans.

More leverage with providers. In many cases, a third party administrator does not have a primary relationship with the plan sponsor. Instead, the TPA might be brought in by an investment partner. This often results in the plan sponsor having little leverage when a service issue occurs. When your accounting professional services the plan, plan sponsors have greater leverage by being able to rely on a professional who understands the expectation of timely, accurate service.

Greater personal wealth. An accounting professional can more successfully serve as a trusted advisor to a plan sponsor when he or she understands the complete financial goals of the business and the individual. By putting all of the pieces together, the accountant can provide more detailed financial planning services and more effectively help the plan sponsor meet his or her personal wealth goals.

Keeping business financial components compartmentalized and managed by separate professionals could be holding your business back from more effectively reaching your personal and business financial goals. To more effectively plan and meet your strategic financial goals, consider inviting your accounting professional to service your third party administrator plan.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.