What is the Difference Between Retirement Plan Administration and Recordkeeping?

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

http://www.abgncs.com/RetirementAdministration.aspx

tstruck@abg-mn.com

COBRA Pricing Options

In order to price COBRA administration services on a per benefit eligible employee basis, there are a number of variables that need to be collected. These variables can fluctuate significantly among companies. They can also vary significantly from year to year. COBRA administrators will typically load those rates to accommodate those fluctuations.

An alternative to pricing on a per-benefit-eligible basis is to price on a per-event basis. The expense of each event can be calculated accurately and then a reasonable profit margin can be added to it. Employers purchasing on a per-event basis only pay for services they use. No load has to be applied to these rates because fluctuations are easily accommodated. 

Therefore, employers that purchase COBRA administration on a per-event basis typically pay less than half of what employers pay on a per-benefit-eligible basis. 

The Author: Roger Jorgensen, RHU, REBC

Director of Marketing - HSA, FSA, HRA & COBRA

http://www.abgncs.com/COBRA.aspx

rjorgensen@abg-mn.com