It’s All About Competent Plan Administration

While I know my discussions about payroll provider and bundled third party administration firms (TPAs) have hit nerves (especially those that work for those firms). We can all debate whether there is a link between running payroll and running 401(k) plans or whether there is an inherent conflict of interest for a TPA that has it own investment advisory practice. I think the main important thing is that whatever TPA a plan sponsor selects, it should select a TPA that is competent in its services and charges a reasonable fee for the services they provide. It’s that simple.

So while I have been honest in my views about payroll provider TPAs, my only issue has been the way they operate in administering plans. So I don’t care whether the TPA is in the payroll business or the meat packing business, the most important thing is competent administration at a fee that plan sponsors can understand, that’s it.

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2 Responses to It’s All About Competent Plan Administration

  1. Pingback: It's All About Competent Plan … – The Rosenbaum law Firm PC | law firm new york guide

  2. Scott Barr says:

    Ary–I’m shocked! You’re not capitulating, are you??? Just kidding. . .

    I guess we are all struggling with the notion of “competent”. As I have said before, we all know what “bad” plan admin looks like. I would guess that none of us have ever seen “perfect” admin. “Competent” must live somewhere in between.

    I suppose, if we were to combine the services of a good TPA, along with a proactive ERISA attorney, add in a robust fund lineup, and a financial advisor that actively gets hands-on with investors (no matter their plan balances)–we would be off to a good start. . .but what small business has the time, money, or inclination to go through all of that?

    As you know, I firmly believe that I offer my clients a world-class solution to the needs of their locally owned business. Even if we can agree that it’s “good enough”–isn’t that good enough? Given that it can ALWAYS be better, I firmly stand behind the idea that every business needs a plan, and the government should have some tolerance for the calling of these business owners. Let’s follow the laws, make sure nobody is stealing the money, it’s being deposited ina timely fashion–and get as many employees involved as possible.

    A HUGE area of improvement is in the area of financial aptitude on the part of the employees. Perhaps, given your gift for communicating, another topic could be the entire notion that the U.S. population is largely undereducated about basic principles of finance. Most of the employees that I talk with can’t tell me what “pre-tax” means, or why “dollar cost averaging” is important. They aren’t stupid–it’s just not important. Maybe we should change that!

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