BUILD A 401(K) DREAM TEAM WITH THE POWER OF PARTNERSHIP

Posted on by Jerome.Pfeffer

Leverage service providers to help your 401(k) plan run more smoothly.

As a retirement plan sponsor, you are a valuable member of a team that includes your recordkeeper, third party administrator (TPA), financial wellness provider and retirement plan advisor. Each member must uphold their roles and responsibilities to maintain a stable and well-standing retirement plan. Much like a table, if one leg fails to support it, you may find yourself with a mess on your hands.

Your retirement plan service providers can help support critical functions such as recordkeeping, plan design, compliance, administration, participant education, investment selection, management and monitoring — all while keeping costs reasonable.

To be sure, partnering with a team of supportive, knowledgeable providers has the potential to contribute to the success of your 401(k) plan and make your life easier.

The Benefits of Partnership  

Many plan sponsors opt to outsource to a small but mighty team of partners for support with various duties, from plan governance and administration to investment management and financial wellness. Depending upon the provider, some responsibilities may overlap. For instance, some recordkeepers have responded to the financial uncertainty of the past few years by offering emergency savings products that employers can provide as an employee benefit. In the past, these products were primarily in the hands of financial wellness providers.

Generally, however, plan sponsors can get the best “bang for their buck” by utilizing providers according to their strengths. For example, a TPA likely has expertise when it comes to compliance testing, while a recordkeeper may be more knowledgeable about integrating payroll systems and keeping tabs on key plan and participant data.

Partnering with external service providers can deliver several benefits for plan sponsors and participants including improvements in:

Keep in mind that outsourcing doesn’t absolve you or your retirement plan committee of fiduciary duties. Ultimately, you are responsible for ensuring that plan providers fulfill their responsibilities and deliver a level of value and service that’s worthy of their fees. That said, these partnerships can help lighten your load and allow you to focus on your core competencies while benefiting from solid partnerships with quality providers.

Who Does What?

In short, there is no cut-and-dried answer. Providers will have varying services and specialties in the areas of 401(k) plan management. In the case of redundancies, you may choose to assign specific responsibilities to the vendors you determine are the most qualified.

Generally speaking, here are some of the 401(k) plan responsibilities your recordkeeper, third party administrator, financial wellness provider and retirement plan advisor partners may take on in whole or in part:

Recordkeeper*

Third Party Administrator (TPA)*

Financial Wellness Provider*

Retirement Plan Advisor*

* This list is not a complete list. Contact your service provider for an accurate list of services provided to your plan. 

Building Your Dream Team

No two plans are alike, so your best bet may be to determine what works for your business and employees and make sure your provider partners deliver on those expectations. 

We help our clients evaluate their current service providers, the tools and technology they offer and the value they bring. If you have questions about how to optimize your plan provider partner relationships, we can help. Contact us for additional guidance and to learn more about partnership opportunities.

Jerome Pfeffer, CRC, AIF

Managing Director

INVESTMENT SOLUTIONS GROUP

6020 Academy NE, Suite 206

Albuquerque, NM  87109

(505) 888-4015 Direct

(505) 515-0036 Fax

Jerome.Pfeffer@lpl.com

www.investmentsolutionsgroup.com

Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser. 

Member FINRA / SIPC.

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.

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