There are several key roles when it comes to maintaining your 401(k) plan – the investment advisor, the recordkeeper, and the third party administrator (TPA). Plans with more than 100 participants must also engage a CPA to audit their financial statements each and sometimes you might have tax professionals or attorneys you work with, but we will focus on those primary three roles here.
Likely the first person you encounter when you set out to start the plan is your financial advisor. The advisor’s role, generally speaking, is to review and guide you through investment decisions for the plan during plan establishment and on an ongoing basis. In addition, the advisor will often host group educational meetings for plan participants and may also offer the opportunity for one-on-one sessions with them to help with financial planning. Different financial advisors engage at different levels of service, but the takeaway here is knowing their focus is on your plan’s investments and participant education.
The most visible thing the recordkeeper does is to provide the website that your participants log into to view their accounts, make changes to their investments, and request distributions. Likewise, the recordkeeper will offer a website for you to manage the plan, remit deposits, and add new participants when applicable. In addition to providing on-demand account access to both you and your participants, they also prepare quarterly participant statements. The recordkeeper works closely with the financial advisor to provide enrollment materials and other educational support.
Behind the scenes, however, the recordkeeper is the provider that keeps track of the plan’s assets by participant, contribution type and investment options. They also produce various financial reports that are necessary for other elements of keeping your plan in good working order.
Third Party Administrator (TPA)
And then there’s your third party administrator or TPA, that’s us! Your TPA provides your legal plan document, performs your annual compliance testing and contribution calculations, prepares the annual Form 5500, and serves as your ongoing resource for any technical retirement plan needs. We like to have you think of us as the point guard for your retirement plan; we are happy to be your go-to resource for any questions that arise, and we’ll do the running around to incorporate your other service providers as needed. When business transactions, demographic changes, and retirement objectives shift, your TPA is available to discuss the details with you to ensure that the plan you set-up can evolve to meet the ever-changing needs of your business and employees.