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Key Questions for Plan Sponsors When Interviewing a Third-Party Administrator

Offering a suitable retirement plan is an essential part of a company's benefit package, necessary for attracting and retaining talented employees. However, managing such a program successfully and in full compliance with regulations can be a challenging task. This is where a third-party administrator (TPA) becomes invaluable. If you're a plan sponsor in the process of interviewing potential TPAs, here are critical questions you should ask.

  1. "Are you a specialist in retirement planning?"
    While many financial professionals can offer retirement plan services, not all of them have the specific expertise required by these complex products. As a plan sponsor, you want to entrust your employees' retirement plans to someone who specializes in this area.
  2. "Who will be our recordkeeper?"
    The recordkeeper tracks all the contributions, distributions, and other transactions related to your plan. Ensuring your third-party administrator can provide or recommend a reliable recordkeeper ensures the smooth operation of your plan.
  3. "Can you explain our share class options?"
    Different mutual fund share classes have variations in expenses and services provided. Understanding these differences aids in selecting the most appropriate options for your company’s plan.
  4. "How can you help align our retirement plan design with the company’s goals?"
    Your chosen TPA should be able to work with you to design a retirement plan that caters to all employees from top to bottom. This could involve adding options such as profit-sharing, safe harbor or new comparability plans, depending on your company's specific goals.
  5. "Do you recommend including automatic features in our plan?"
    Automatic features like auto-enrollment, auto-escalation, and re-enrollment can be beneficial in helping employees prepare for retirement. However, they must be presented and implemented correctly to secure participation.
  6. "What kind of ongoing support and education can you provide?"
    Ongoing education and support for plan sponsors and plan members are integral parts of a successful retirement plan. Ensure the TPA is committed to providing these services.
  7. "How do you handle plan compliance and regulatory changes?"
    Regulations related to retirement plans are continually changing. Your TPA should be adept at anticipating and adapting to these changes, ensuring your plan remains compliant and optimizing its performance.

Remember, the ultimate aim is to provide your employees with a retirement plan that will serve them well into their golden years while complying with all regulations. By asking these questions, you and your potential TPAs can have discussions that will lead to fruitful relationships for your company and employees alike.