More Tips for Employers on Employees Retirement Plans
Prevailing wage contractors should give potential 401k service providers comprehensive information regarding the retirement plan they are looking for. The type of services that they will give and the compensation they are asking for will help you make a good comparison and choose the best TPA for your retirement plan.
Prevailing wage contractors should take note of the following information:
- Details about the TPA: its financial condition and its experience with 401k plans of a similar complexity;
- Details about how well does the TPA serve its clients: the background, experience, and credentials of the personnel who will be managing the retirement plan’s account. The prevailing wage contractor should also take note if there are any litigation that was made against the TPA
- An overview of the TPA’s business practices: how will they invest the retirement plan’s assets, manage 401k plan investments and handle participant investment decisions
The prevailing wage contractor should ensure that the selection process is well-documented. If an administrative committee will be utilized, the roles of the members should be well-explained.
Fees for Third Party Administrators
As a prevailing wage contractor, it is important that you understand the fees that you pay to your service provider. Even if the law doesn’t set an allowable amount of fees, it still requires the prices of the fees to be reasonable. Even if primary selection is finished, prevailing wage contractors should continue to monitor the fees if they are still reasonable after some time.
- Ask what services are included or not in the fees that the TPA charges. Some operate with a packaged service agreement while some charge separately for each type of service. Ensure that what you are paying for will only include the kind of services that you want.
- Ask about the compensation that the TPA will receive from the retirement plan. Some receive additional fees from other sources such as mutual funds.
The retirement plan document should identify how the fees will be paid. The fees may be shouldered by the prevailing wage contractor, the plan itself or both.
Monitoring 401k TPAs
Once a service provider has been chosen, the prevailing wage contractor should monitor its performance to check if they have been doing the services that has been agreed upon. Some monitoring practices include:
- Evaluating the notices given by the TPA regarding possible modifications to the compensation and details provided when they were hired or upon renewal of contract
- Checking the reports submitted
- Reviewing the actual fees that are being charged
- Making inquiries about their policies and practices including turnover of investments, trading and proxy voting
- Monitoring how complaints of prevailing wage workers are being handle
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You should have a sharp eye for a TPA who provides high quality service when it comes to giving the best retirement plan to prevailing wage workers. Our years of experience in the industry will make sure that your future is in good hands. Contact ARCHER JORDAN and let’s talk about how we can manage your employee benefit plans for you.
