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How to Select Qualified TPAs and When to Use Them

Qualified TPAs Working with local, qualified TPAs (third party administrators) has become the most popular service model for smaller defined contribution (DC) plans but not all TPAs are created equally with almost 4,000 firms estimated to be working in the market. So what’s the best model, how can you tell which type of service is best for you and how to you know how to identify qualified TPAs?

A TPA firm blogs about the different types of firms in the market. These providers have become key to companies that do not have the time or the expertise to run their plan to not just make sure they are in compliance but also to provide the optimal plan design to help minimize taxes and increase retirement savings.


There are two types of TPAs – those that just do compliance and consulting working with a record keeper called the “unbundled” service model and those that also provide record keeping services which is called “bundled” popular with larger national firms like Fidelity who do the compliance and consulting in-house.


The issues with the bundled model for national providers is that, especially working with smaller plans, the service is not personalized and neither is the plan design. Plans often suffer avoidable fines and penalties including failing discrimination testing. Some smaller bundled providers may offer more customized plan design and services but do not have the budget to keep up with technology with one notable online provider recently experiencing issues as they transitioned record keeping systems. On the other hand, when something goes wrong under a bundled model, you know who to blame.

Another mistake is to use a provider to help with plan design and compliance that may not be qualified even though they may have a relationship with the company to help with taxes and investments. Though customer service may be better than with the monolithic bundled providers, the results may be the same.

Finally, there is the unbundled model using an experienced TPA who is not only adept at compliance but also with consulting and plan design. These firms generally work with plan advisors partnering also with CPA firms and payroll vendors providing personalized customized service.

So why don’t a greater percentage of larger plans use qualified local TPAs? Because larger plans can get customized plan design and service from bundled providers when assets grow which is not economically viable for smaller plans. A good way to spot an experienced TPA is to ask for referrals from advisors and record keepers that work with TPAs as well as look for credentials that these professional receive from several educational organizations.

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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