strategies for selecting a
third party administrator
overview
If you have reviewed the requirements of the IRS
regulations that govern your retirement savings plan,
such as a 403(b) or 457(b) plan, and want to use the
services of a Third Party Administrator (TPA), the next step
is selecting the right company to perform these services.
To find the right TPA, you need to know what services
are important to you, and select a TPA that best meets
your needs. Not all TPAs are alike and you must ensure
the company you select is capable of handling the
responsibilities and tasks required under the regulations.
How to Use This Brochure
This brochure offers you key strategies, outlined in a three-step
process, for reviewing and selecting a suitable TPA:
• Step 1 provides you with a brief overview of the differences between companies in the marketplace.
• Step 2 provides you with a range of questions you can use to learn more about each company.
• Step 3 includes a checklist to help you compare each company.
Step 1
understand your options — know
the differences
There are differing levels of services available and it is important to understand the key
differences between the types of companies you’ll find in the market—a recordkeeper,
a common remitter, a quasi-TPA, and a full-service TPA like PlanConnect®. See below
for definitions of each type.
Recordkeeper
• Keeps records and maintains accounting of values attributable to each participant.
• Some recordkeepers keep track of the sources of money, e.g., pre-tax vs. Roth contributions.
• Typically does not handle compliance services.
Common Remitter
• Captures data from the employer’s payroll.
• Compares the amounts with expected contributions.
• Reconciles errors in contributions (exceptions) with the payroll department.
• Identifies employees eligible for “catch-up” contributions and applies contributions in the proper order.
• Distributes contributions to investment providers.
Quasi-TPA
•M
ay be referred to as a “TPA” but does not provide all TPA services, as described in the TPA section
on the following page.
• Some offer one or more of the following services:
– Common remitter services
– Consulting
– Educational materials
– Plan Document; Specimen documents only
2 step 1 | understand your options — know the differences
Full-Service TPA
• May be independent or owned by an investment provider.
• Acts as a central point of contact for plan level information.
• Provides common remitter and recordkeeping services.
• Provides overall compliance for transactions at the plan
level (such as loans, hardship withdrawals, tracking
suspensions and reinstatement, distributions, and
monitors required minimum distributions).
• Coordinates various vendor activities.
• Maintains employer plan website.
• Develops and maintains plan document.
• Maintains administrative forms.
• Provides employer manual.
• Offers employee and employer education.
• Assists and advises employers regarding eligibility and participation requirements, e.g., universal availability rule.
• Provides audit support (IRS and/or independent audits).
• Can provide data aggregation and other services to assist in maintaining ERISA exemption.
• A TPA provides additional services for ERISA plans:
– Assists in the calculation of contributions
– Monitors eligibility
– Assists in plan design to eliminate compliance issues
– Maintains plan and Summary Plan Description (SPD)
– Prepares Form 5500 reporting
– Performs compliance testing, including employer match contributions, etc.
“There are differing levels of services available and it is
important to understand the key differences between
the types of companies you’ll find in the market.”
step 1 | understand your options — know the differences 3
Step 2
asking a potential TPA
the right questions
Asking the right questions will help you determine which company is capable of
performing the services you need for your retirement plan. When considering a potential
TPA, you may find the following questions helpful. You can use these in addition to any
questions you may have that are specific to your plan.
Experience & Service
IRS Audit Support
•D
o you offer support in the event
of an IRS audit? If yes, what kind
of support?
• Does the TPA have a SAS70 Type II
or SSAE 16?
TPA Attribute
Product-Based
•D
o you maintain errors and
omissions insurance and
liability insurance?
TPAs tend to have certain attributes based on whether they
are independent TPAs or connected to a specific investment
product. At PlanConnect®, we have combined the strongest
attributes of each into a single source for your TPA needs.
Independent
• Is a plan relationship manager/
team assigned? Describe
the person/team and
related qualifications.
Comparing TPAs
PlanConnect®
•W
hat experience do you have with
retirement plans? Describe that
experience, including number of
years, services you provide, etc.
1
Offers a full range of services
Sufficient financial resources
and stability
High-quality, one-on-one
level of service
State-of-the-art systems
1 Generally offers basic services only (with that product);
additional features available for a fee.
Yes
Varies
Usually
Information Security
• Describe the level of security utilized by your organization. How are systems monitored for intrusion?
• Describe the controls used to ensure transactional integrity.
• Describe how participant and plan data is transmitted and secured by your systems.
4 step 2 | asking a potential TPA the right questions
Recordkeeping/Contributions
• Do you offer common remitter services?
• Describe the method/process used to perform
recordkeeping and report contributions from multiple
investment providers in a single plan. Include a typical
timeline and how differences are reconciled. Provide a
sample report.
• How will participant deferrals be monitored? Explain how
the 15-year catch-up contributions and the age 50 catchup contributions are handled.
• How are excess contributions monitored? Are corrections
for single investment providers handled in the same
manner as a plan with multiple investment providers?
• Explain how excess contributions are applied for a
participant contributing to multiple plans. Would the process be the same if a participant in the 403(b) or
457(b) plan owns or controls another business?
• How many contribution sources can your system handle, e.g., rollovers, pre-tax deferrals, Roth deferrals,
employer contributions, etc.?
• Explain the method used by your organization to update plan records where multiple investment providers
handle financial transactions. How frequently are participant balances updated on the consolidated
participants’ website?
• Describe the procedures used to ensure the recordkeeping system remains in compliance with changes in the
law or regulations.
• Can you provide services tailored to a plan looking to maintain an ERISA exemption?
step 2 | asking a potential TPA the right questions 5
Transactions
• Describe your compliance monitoring process. Explain how
this process is designed to prevent a compliance error as
opposed to correcting it after it has occurred.
• Explain the process for receiving and qualifying hardship
distributions.
• How are available loan amounts determined? How are loans
issued among multiple investment providers? Are loans with
multiple investment providers and/or multiple plans monitored
for compliance? Explain the process when a loan is in default.
• Describe the process for handling required minimum
distributions, from identification to distribution.
• Describe the process for handling other transactions,
including transfers, Qualified Domestic Relations Orders
(QDROs), disability distributions, and other distributions.
• Explain the compliance monitoring in place for “control” of other companies by employees.
Plan Documentation & Materials
• Is an employer implementation guide or administration manual provided to support set-up and
ongoing administration?
• Do you offer customized plan documents or specimen documents only?
• If you offer customized plan documents, do you automatically offer ongoing amendments as required?
• Do you provide and maintain administrative forms?
• Do you provide and assist with Information Sharing Agreements?
6 step 2 | asking a potential TPA the right questions
Education
• What type of educational services do you provide?
• What educational material do you make available via the web?
• Do you provide examples of educational material?
• How do you keep an employer informed of regulation changes?
• How do you promote participation in the plan?
Online Capabilities
• Is a website available for participants to access account information? Does it provide the amount available for
transactions such as loans or hardship withdrawals?
• Describe the site and its functions. Is a sample website available to preview?
• Does the website include information for each provider?
• Is a website available for the employer? If yes, what information is available? Is a sample website available to
preview? Does the website include information for each provider?
• What reporting is provided via your website? Provide examples.
• What type of support/training do you provide to employees trying to access the site?
step 2 | asking a potential TPA the right questions 7
Step 3
Now that you understand what’s required of a full-service TPA, compare PlanConnect®
and its services to those of our competitors.
Compare PlanConnect®
PlanConnect®
Experience & Service
Experience in the 403(b) and 457(b) market
Plan relationship manager assigned
Maintains errors and omissions insurance and liability insurance
IRS Audit Support
Assistance in event of IRS audit
Information Security
Ensures privacy of plan participant information
Secure electronic data transmission
Secure website for data uploads
Recordkeeping/Contributions
Common remitting processing/services
Monitors contribution limits, including catch-up contributions; monitors ordering
rules, if applicable
SAS70 Type II or SSAE 16 performed by top-tier accounting firm
Supports multiple source accounts (e.g; rollover, Roth, employer contributions, etc.)
Transactions
Provides and updates required loan policy
Provides and updates required hardship withdrawal policy
Assures that plan and underlying contracts are consistent
Compliance review for loans, hardships, exchanges, transfers, Qualified Domestic
Relations Orders, disability distributions, required minimum distributions, etc.
Online facility for transaction requests and approvals where applicable
Plan Documentation & Materials
Ongoing employer’s plan implementation guide/manual
Provides initial plan documents
Maintains and amends all legal documents as required
Customized plan documents, if necessary
Information sharing agreements
Education
Online support for plan sponsors and participants
Plan sponsor-directed educational material
Tools, calculators, and webinars for plan participants on various retirement topics
Web, e-mail, and print participant education material
Live and/or virtual training seminars
Websites
Availability of website for participants
Availability of website for plan sponsors
Required plan reporting available online
Provider information is available on these websites
Other TPA
Yes
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Contact PlanConnect®
PlanConnect®, 100 Madison Street, Syracuse, NY 13202
Find us on the Web at:
www.planconnect.com
Email us at:
info@planconnect.com
Call us at:
800-923-6669
PlanConnect, LLC is a wholly owned subsidiary of AXA Distribution Holding Corporation, an indirect subsidiary of AXA Financial, Inc. PlanConnect®,
Connect2Remit®, Connect2Comply®, and Connect2Maintain® are registered service marks of AXA Distribution Holding Corporation. Connect2Achievesm is
a service mark of PlanConnect, LLC. PlanConnect® may not be available in all states. AXA Financial, Inc. and its family of companies do not provide tax
advice. Please consult with your tax advisor regarding your particular circumstances. Each company is affiliated. AXA Distribution Holding Corporation
and AXA Financial, Inc. are located at 1290 Avenue of the Americas, New York, NY 10104, (212) 554-1234
PlanConnect, LLC is located at 100 Madison Street, Syracuse, NY 13202, 800-923-6669.
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