Blog
May 2, 2018
What Role Does the Third Party Administrator (TPA) Have in Recordkeeping?
Our last two blog articles have gone over the role of the record keeper in your 401(k) plan. As you may recall, there are many people who work behind the scenes to help manage a 401(k) plan. There’s the Investment Advisor, Third Party Administrator (Benefit Equity, Inc.), mutual fund companies, and a recordkeeper, (insurance company or investment company).
So where does the Third Party Administrator (TPA) fit into the equation? Benefit Equity, Inc., (BEI) is a Third Party Administrator and we’ll discuss our role in recordkeeping and your 401(k) plan.
Benefit Equity as TPA
It’s important to not confuse the role of the recordkeeper with that of the Third Party Administrator such as Benefit Equity, Inc. (BEI). They are not a replacement for plan design, plan documentation, compliance, government reporting and answering questions about operational issues. We work with the recordkeeper to exchange information to help the Employer keep the plan in compliance.
Small employers need an efficient recordkeeping platform to alleviate a significant amount of work for both themselves and Benefit Equity Inc.
Profit Sharing/401(k) Plans can have a separate brokerage account for each employee. Be aware of what this means.
All employees eligible for the plan are supposed to have the same opportunity to invest their money. Different brokerage accounts will have different fees and investment opportunities. The employer is supposed to provide information about each brokerage account so that each employee has the opportunity to use those investments.
Recordkeepers we use have brokerage accounts attached to their system so you do not have to separately account for the money, employee statements are inclusive of the investments from the brokerage account and all notices are provided to assure compliance.
If you venture outside a recordkeeper be aware that brokerage accounts do not break out origins or sources of money, they do not provide participant disclosures as mandated by the Department of Labor and they do not provide tax notices or Form1099R’s to terminated participant’s receiving their money. This is then left up to the Employer and Trustee.
BEI in conjunction with financial advisors are constantly benchmarking and reviewing recordkeepers. If you want to know whether your current recordkeeper is right for you or want to learn more about how we work with recordkeepers, email us at clong@benefitequity.com or call 800-899-9141.
Author: Robert Gorelick, APA, Founder Benefit Equity Inc.