Third Party Administrators develop custom retirement plans for your business. Unless you own a large company with the appropriate personnel, you should hire a retirement plan TPA to handle your employee 401(k) plan. Their expertise helps ensure that your pension plan grows and provides a real benefit to your employees.
Take your time in selecting a 401(k) Third Party Administrator; you want to find a pension TPA with which you can establish a long-term business relationship. After all, you're talking about your employees' financial security. Expect to go through these phases when working with a Third Party Administrator:
- Consult with the TPA about your needs for tax-deferred plans and employee retirement and savings benefits.
- After the consultation, ask the pension TPA to provide you with a proposal of the types of plans suitable for your company. Ask to see all provisions, including penalties and vesting schedules.
- After selecting a 401(k) Third Party Administrator, they will get IRS approval of your plan, provide all necessary employee paperwork, and work with you to get your employees enrolled.
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Work with one of the larger, national pension TPA companies
You've probably seen insurance companies advertising their retirement plan services on TV. With a large company you get experience and expertise. However, you may also end up with a larger bill for plan administration.
Choose specialized retirement administrators
Some companies work solely in Third Party Administration. With one of these smaller companies, you often have more options in selecting a 401(k) provider.
Look for Third Party Administrators who do business in your state
The Internet makes it easy to locate a list of Third Party Administrators which are licensed in your state. You can do a quick comparison online and then call only those companies that offer the services you need.
- Once your Third Party Administrator has all the paperwork for your plan, you should ask your company attorney to review all documents.
- Don't think 401k TPA is only for large companies. Many retirement plan administrators work with companies with as few as 25 employees.