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The Value of Using a Local TPA


At a TPSU program held at UC Irvine, the HR professional at a 250-person not-for-profit extolls the benefits of working with a local TPA on their 403b plan.

There are three types of service arrangements for defined contribution (DC) plans like 401ks or 403bs including:

  1. Bundled – Record keeper does compliance and consulting as well as keeping track of records (technology) also offering a choice of investments.
  2. Unbundled – Same as bundled except a local TPA does compliance and consulting working in partnership with the record keeper.
  3. Open Architecture – The TPA offers record keeping, compliance and consulting services along with a myriad of investments often using a 3rd party like Schwab or Fidelity brokerage services.

The record keeper for the 403b HR professional attending the TPSU program offered both bundled and unbundled service models but because of good past experiences with a TPA, she selected the unbundled model which is most popular with plans under $10 million.

The experience has been rewarding as her TPA, which is local and visits with her periodically reviewing the plan making sure it is in compliance proactively making suggestions to improve the plan. They also provide an administrative procedures manual so the payroll person at the not-for-profit knows exactly what to do making the administration of the plan easier.

The TPA was selected through a process which included interviewing three vendors choosing the current one based on experience with plans of a similar size and type. It has also helped that the plan advisor knows and works closely with the TPA along with the plan’s auditor making for an integrated, local team leveraging a national record keeper.

DC plan sponsors are required to be prudent experts but that does not mean they must know how to perform all duties to effectively run a retirement plan. But they must prudently select and monitor those providers. Many smaller plans use a TPA while larger plans may get the customized, personal service from their bundled record keeper. Making the right choice depends on the needs of the company and the employees.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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