In the world of
retirement plans, oftentimes, plan administration and recordkeeping are two
words used interchangeably. However,
they represent separate and distinct services.
Third party
administration (TPA) is the actual testing and compliance services provided on
a retirement plan (legal document work can be included in TPA services, as
well).
Recordkeeping
services, on the other hand, are the accounting functions on a retirement plan
at the group level all the way down to the participant level. Recordkeeping also involves the services
associated with the plan sponsor/participant website and voice response unit
(VRU) access.
As a service provider
in the retirement plan industry, TPA and recordkeeping services can be provided
by the same organization. In addition,
there are providers that specialize in only TPA services and others
specializing in recordkeeping-only services.
Ultimately,
the plan sponsor must to determine the best fit provider to help maximize the
success of their retirement program.
The Author: Tim Struck, CRPS
Wholesale Retirement Plan Consultant
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