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What Does A 401k Third Party Administrator Do

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What Does A 401 Plan Administrator Do

What is a Third Party Administrator of a 401k Plan?

The 401 plan administrator is typically an outsourced third party who is tasked with handling all day-to-day responsibilities, including:

  • Consulting the employer on initial plan design, employee matching program, and profit-sharing options
  • Preparing the Summary Plan Description for participants and beneficiaries
  • Determining employee eligibility and enrolling participants
  • Approving all loans and distributions, as well as employee status changes
  • Monitoring IRS compliance and regulatory changes affecting the plan
  • Conducting audits and nondiscrimination testing
  • Filing Form 5500, Safe Harbor notices, and Form 1099-Rs with the IRS
  • Fixing compliance problems that may arise
  • Helping employers get through mergers and bankruptcies
  • Generating annual participant censuses, and
  • Communicating plan updates, changes, or benefits to employees.

How Are Employee Retirement Plans Administered

Different types of expertise can be required to properly administer benefit plans.

Investment services are often needed for 401 and similar plans. Theyre typically provided by a financial professional such as an advisor, and involve choosing and monitoring the investment options made available to employees through the plan, to help the employer provide an effective benefit that helps improve employee retirement readiness.

Recordkeeping services entail monitoring participant accounts in terms of balances, investment options, contributions from employee versus employer match, cost basis tracking of company stock, etc.

Finally, administrative services include plan design and creating, maintaining, and updating the plan documents, as well as compliance testing and reporting to government agencies such as the Internal Revenue Service and Department of Labor.

Its easy to see how each area can impact the other two, and yet at the same time, how each area requires specialization.

What Are The Responsibilities Of A 401k Plan Administrator

Record-keeping: The 401k plan administrator must keep track of all participant accounts and any funds related to those participants. This is important because in the case of an audit, its important to account for all funds that came in or went out of the Solo 401k plan, including rollovers, contributions, distributions, participant loans, investment gains, investment losses, etc.

Our recommendation is to work with your CPA or tax professional to ensure the books of your Solo 401k are accurately kept. You can also use accounting software such as QuickBooks, Freshbooks, or even an excel spreadsehet. The key here is excellent, squeaky clean records.

If your Solo 401k plan includes a Roth sub-account youll want to ensure the books are clean for both Roth and pre-tax funds. As these are separate tax classes, most Nabers Group Solo 401k accountholders choose to keep their Roth and pre-tax funds separate. On a practical level, this usually means maintaining both a Roth and pre-tax bank account. The bank account is in the same name, and under the same tax ID number as there is only one 401k trust, but keeping bank accounts separate can help to keep record keeping an easier task.

Keep a neat record of your contributions, and notate clearly which contributions are Roth and which are pre-tax contributions, and therefore tax-deductible.

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Third Party Administrator Vs Advisors: What Are The Key Differences

The acronym TPA gets thrown around regularly in the 401 industry. If you are a plan sponsor, you may have been directed to your TPA when you tried to find your plan documents or testing results for your plan. As a plan participant, you may have been directed to your plans TPA for help or transaction requests. To make matters more confusing, TPAs also exist for benefits other than retirement, such as healthcare and insurance. So, what is a TPA and what exactly do they do in the context of your companys retirement plan?

First things first: TPA stands for third party administrator. If your 401 setup has a separate TPA, its because your recordkeeper doesnt perform any administrative work for your plan. In this case, your recordkeeping solution is unbundled, meaning that you have both a recordkeeper and a TPA. The third party administrator would be responsible for common administrative tasks including plan document maintenance, form 5500 preparation, creating match and profit sharing calculations, and performing non-discrimination testing. The TPA may even work directly with plan participants, communicating plan updates. These days, its common for the recordkeeping institution to also act as an administrator , eliminating the need for a separate, third party administrator.

We’re Your Expert 401 Third

401(k) Third Party Administrator vs. Advisors: What Are The Key ...

Guidant is your trusted partner to start your small business or franchise strong. As part of your Rollovers for Business Startups funding, well help you set up a new 401 plan for your business. But were not a one-and-done firm: were here for you for the life of your business. Our Third-Party Plan Administration services help keep your 401 plan compliant with the IRS and DOL so you dont have to worry about anything but the success of your business.

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How Does A Tpa Work

TPAs work by accepting information from their clients, processing it, then sending the results back to the clients. TPAs may have their own customer portals that they provide to a client when they contract their services. They supervise the process of completing administrative tasks for a business’s customers and eliminate the need for their clients to act as a liaison.

Companies that hire TPAs save time and money by outsourcing complex services instead of having to invest in their own administrative techniques, while TPAs can make a profit by efficiently handling administrative tasks for several similar companies at once. Some companies pay TPAs a flat rate based on the services they select, while others provide TPAs with a percentage of their insurance premiums.

Related:Business Administration vs. Business Management: What’s the Difference?

How We Chose The Top 10 Tpas

Your employees and business are unique, and you should find a TPA 401 provider that fits your uniqueness. When putting together our third party administrator rankings, weve included providers who strive for the same excellence we do.

The best third party administrator for your company may not be local. Our list includes TPAs from all over the country. Even if youre not in Utah, you can find the best third party administrator for your companys 401 plan for your business. It’s also worth noting that some TPA 401 providers will administer individual plans as well as group plans.

Without further ado, here is our list of the top 10 TPAs to consider.

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Find The Administrative Support You Need

Managing a 401 is a complex task. Its worth the time to find the right third party administrator for your retirement plan, and its important that the company you partner with is up to the job. Finding reliable retirement plan partners like TPAs is easier when you enlist the services of a dedicated 401 adviser that specializes in helping businesses like yours customize a retirement plan thats right for them. Learn more about the many 401 service providers that serve as part of your plans team in our resource library, and contact Fisher Investments today to get help with everything from improving your plan to managing your investment lineup.

Cook Martin Poulson Pc

What is a TPA and what do they do? (Third Party Administrator)

Cook Martin Poulson, PC is a top provider of retirement plan third party administration services in Salt Lake City, Utah. We take a proactive approach to retirement plan design and implementation, living by our motto: We are on purpose, not just on task!

CMP was established in 1977 and the 45 years weve been in business, we have formed numerous long-lasting relationships with clients in the Salt Lake City community. Our employees who administer retirement plans are members of the American Society of Pension Professionals and Actuaries who have the experience and knowledge to help your company.

We have experience designing and administering a broad range of employee retirement plans including:

  • 401 Plans


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What Is The Difference Between A Record Keeper And A Third Party Administrator

Posted by: Fred Barstein in Latest Stories, Newsletter, Partners, Record Keepers, Third party administrators, Trending StoriesMarch 13, 2017

What is the difference between a record keeper and a third party administrator? In a recent article by Brightscope, they asked the question about the differences in service providers, and wondered if plan sponsors knew the difference. Running a qualified retirement plan as a plan sponsor can seem like a daily diet of alphabet soup. There are dozens, maybe even a hundred acronyms used regularly in the retirement industry. Also, a commonly asked question is what is the difference between a record keeper and a third party administrator? Many plan sponsors get confused on this one because many services tend to be bundled and it is sometimes difficult to understand the difference between a record keeper and a third party administrator .

So here is a practical guide to understanding the differences between the two types of service providers.


A Third Party Administrator is an organization or an individual that processes transactions and/or claims or certain administrative aspects of employee benefit plans for a separate entity. Companies who offer employee benefits such as a 401k plan will generally outsource the administration of the claims and transaction processing, since the TPA is performing a task traditionally handled by the company.

Here are some examples of what the TPA does for a retirement plan:

Is The Plan Administrator A Fiduciary Under Erisa

Law. Under ERISA, a named fiduciary is anyone who is identified as such by the plan documents, and a functional fiduciary is anyone who has discretionary control over the plans management and assets. The governing plan document identified the employer as the ERISA plan administrator and named fiduciary.

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What Is A Tpa

A third-party administrator, also known as a TPA, is a business that specializes in administrative operations for other companies. TPAs are especially common in the insurance industry, but any company can hire a TPA to handle their administrative services. Businesses outsource their claims and customer interactions to the TPA, which then takes over the entire process of gathering information, storing paperwork and fulfilling changes to client accounts. TPAs have extensive documentation and claims-processing infrastructure that allows them to handle high volumes of requests from their clients.

Related:Outsourcing: What It Is and How It Works

Ten Of The Top 401k Third Party Administrators Reviewed

The Pros And Cons Of Hiring A 401k Third Party Administrator

This post was originally published January 19, 2016 and extensively updated November 20, 2017.

As a top Utah accounting firm and third party administrator of retirement plans, we want to provide a useful resource with a list of top third party administrators 401k in locations outside of the Salt Lake City area. But before we do that, lets quickly explore what a third party administrator is.

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Do I Need A Third Party Administrator For The Solo 401k

A Solo 401k plan is surprisingly easy to administer. With the Solo 401k plan by Nabers Group, you do not need a third party administrator. In fact, you are allowed to act as your own administrator. Read on to learn about the roles and duties of a 401k plan administrator and how you can make it work for your retirement plan.

Lets Talk About The 401 Recordkeeper

The 401 recordkeeper is essentially the bookkeeper of the 401 plan, hence the name. The job of the recordkeeper is to track whos in the plan, what investments they own, and what money is going in or out.

Theyre a fairly passive player typically they dont give advice, they dont calculate whether youre on track to pass the IRS nondiscrimination tests, and they dont track whether the plan is meeting IRS requirements and staying compliant.

The role of the retirement plan recordkeeper has been ripe for disruption, with technology platforms being built to take over the work that had traditionally been done by humans.

According to Fred Barstein, founder and executive director of The Retirement Advisor University, Sophisticated algorithms can easily handle ERISA because its rules-based. While recordkeeping is built on scale, thats not the case for consulting. Emerging players will have a much harder time providing the handholding and consulting expertise of established companies, especially for smaller plans that lack resources.

In short:

  • Partner with you to meet your goals with the 401 plan
  • Focus on employee experience

As you can tell, at its most basic definition, a 401 recordkeeper is the retirement plans bookkeeper.

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Who Is A 401k Custodian

A 401 custodian is an entity hired by the trustee company to handle the buying and selling of investments and keep custody of investment assets. The work of the custodian is documented in a service agreement with the plan administrator, but the trustee maintains control over the actions of the custodian.

Some of the services provided by the custodian may include recordkeeping services of contributions, investment options, plan distributions, etc. However, the 401 custodian does not make investment decisions and has no inputs on how assets are invested.


Third Party Administrators Inc

Third Party Administrator what does that mean?

Third Party Administrators, Inc. in New Hampshire offers TPA services including retirement plan management, flexible benefit plan management, administration of these plans, and consulting. With over 100 years of experience in the qualified retirement plan industry, Third Party Administrators, Inc. understands the day-to-day issues that face your business. They use that familiarity to see the big picture when designing your retirement plans.

This TPA specializes in the administration and testing services of Internal Revenue Code Qualified Group Retirement Plans, and currently administers more than 700 qualified retirement plans for all types of entities in various industries.

Contact Info:

2 Executive Park Drive, Suite 100Bedford, NH 03110603-666-5799

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Question : Do You Take The Time To Explain The Terms Of The Plan To Ensure Our Team Members Fully Understand

In many cases, the task of providing information to a 401 third-party administrator falls on an employee who doesnt have any knowledge of the plan.

Having a 401 third-party administrator that will make the effort to ensure your team understands can benefit your plan in the immediate work, but its also an investment in your employees for the future wellbeing of your 401 plan.

Common Plan Administration Services

Administration is an ongoing process. After choosing a plan design and launching it, 401 plan administrators update the plan and monitor every transaction. They sometimes act as a gatekeeper — certain transactions cannot happen without authorization from a 401 plan administrator.

Typical 401 plan administration services include:

  • Plan design – consulting on how the plan should be structured, if the employer should use a match, safe-harbor option, etc
  • Updating the plan – when regulations or employer needs change, the plan’s rules need to change
  • Monitoring operations – a 401 plan must follow its own rules or there may be tax consequences and legal issues
  • – loans, distributions, and other transactions are evaluated against the plan’s rules and authorized by an administrator
  • Performing tests – under law, retirement plans cannot benefit select employees at the expense of other employees
  • Preparing filings and disclosures – retirement plans must provide information to regulators as well as plan participants periodically
  • Fixing problems – if things don’t work out as anticipated, employers must be notified of problems and potential solutions
  • Consulting – helping employers navigate through unusual events such as company mergers and bankruptcies

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Third Party Administrator Communication

As with any financial partner, clear communication with a TPA is key to a 401 plans success. Whether they are chosen by your 401 adviser or by you as the fiduciary, there should never be a disconnect when it comes to relaying important information. In our recent 401 Small Business Shopping Report, we found that 99% of respondents rated a dedicated point of contact as being either very or somewhat important. Ask your TPA about their channels of communication, expected turnaround time for tasks and questions, and who to contact in case something goes wrong.

But communication is about more than responding to your inquiries. The TPA you choose should not only be able to complete the necessary tasks, but also demonstrate an understanding of your business. They should be aware of important aspects of your plan, such as the size of your company, the number of participants involved, engagement statistics, employee demographics, and your overall goal for benefiting the employees.

Whos Your 401 Administrator

Why You Should Hire a Third Party Administrator for Your Retirement ...

Steve Rosenberg in his Boston ERISA Law Blog recently asked the question, When is a Plan Admininstrator a Fiduciary? Steve then goes on to answer the question in writiing about a recent court decision in the which the decisions main analysis was whether one of the plaintiffs, the plan administrator, qualified as a fiduciary. ERISA requires that the Plan Adminstrator be named in the plan document. The Plan Administrator is a fiduciary because of discretionary responsibility for making the key decisions in the retirement plan such as:

  • Determing eligibility for someone to participate in the plan
  • Determining the amount of benefits payable under the plan and
  • Approving or denying claims for benefits.

So who exactly should the Plan Adminstrator be? The Plan Administrator could be an individual, a committee made up of key executives, or the employer itself. So who should be the Plan Administrator? From a risk management standpoint, the employer should not be the Plan Administrator.

If it is, the Board of Directors and officers can be held liable as plan fiduciaries even if they know little about the day to day operations of the plan. The plan document would then provide that an administrative committee designated by the employer would be the Plan Administrator. The employer, of course, still has the duty to monitor the committees activities.

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