The initials TPA stand for Third Party Administrator. A 401k TPA is a retirement account that is administered by a third party—usually a company that specializes in 401k investing. Whether you're a small, medium, or large business, you may be able to benefit from choosing a 401k TPA. The following are just four of the potential advantages.
Your Plan Is Designed to Fit Your Needs
A good 401k TPA will be custom designed to meet your individual needs, rather than expecting you to squeeze into a one-size-fits-all plan. For instance, bundled services are popular in all aspects of business these days, but a good TPA will be able to provide you with unbundled options with no increase in price.
You'll Save Money
When 401k plans are administered in-house, the person responsible is usually a human resources employee who probably doesn't have the same level of expertise as someone working for a company that specializes in 401k administration. You may also save on investment fees because a TPA usually purchases investment packages in bulk and therefore receives a discount.
You'll also save because although it may seem initially less expensive to entrust the administration of your 401k to a human resources employee, that person may end up neglecting other duties in order to deal with the complexities of the 401k. Remember, it will take this person a lot longer to handle the details of administering the plan because he or she won't be in the possession of the expertise of an experienced, professional TPA.
You'll Receive Expert Service
A typical TPA has years of industry experience and has become an expert in investments as a result. You'll benefit from this expertise by receiving an overall higher return on your investment, and your employees may end getting more back from their contributions than if the plan were administered by someone who is not an expert in the field.
Your 401k Will Meet Legal Requirements
TPAs make it their business to keep up with the constantly changing rules and regulations of regulating agencies such as the IRS and US Department of Labor. A typical human resources employee may miss new laws when they're enacted, thus rendering your 401k plan non-compliant. A TPA will update your plan as a matter of routine to ensure that it's compliant will all existing laws.
Please feel free to contact a 401k TPA professional for more advice on the benefits of opting for this type of service to administer your company's 401k plan.Share