One of the biggest sources of confusion for 401(k) plan sponsors is figuring out who is actually responsible for what.<\/p>\n
You have a financial advisor. You have a TPA. You have a recordkeeper. Maybe you have an ERISA attorney. Everybody is involved with the same 401(k) plan, but they don\u2019t all have the same job.<\/p>\n
Your financial advisor isn\u2019t supposed to be your TPA.<\/p>\n
A good retirement plan advisor can be an invaluable resource. They can help with investments, fiduciary process, fees, participant education, provider searches, and overall plan management. The really good advisors also recognize problems and know when to bring in somebody else.<\/p>\n
But they aren\u2019t necessarily supposed to calculate your nondiscrimination testing, interpret complicated plan provisions, determine corrective contributions, or provide legal advice.<\/p>\n
I\u2019ve seen too many situations where a plan sponsor asks the wrong provider a question and assumes the answer is definitive.<\/p>\n
That\u2019s how problems start.<\/p>\n
The same thing works in reverse. Your TPA isn\u2019t necessarily your investment advisor. Your recordkeeper isn\u2019t your ERISA attorney. Your payroll company isn\u2019t your TPA just because it sends the deferrals to the recordkeeper.<\/p>\n
Every provider has a role.<\/p>\n
As a plan sponsor, one of the smartest things you can do is understand those roles. Ask who handles eligibility. Ask who monitors contribution deposits. Ask who reviews your plan document. Ask who is responsible when something goes wrong.<\/p>\n
Most importantly, make sure somebody actually owns each responsibility.<\/p>\n
The worst answer in the retirement plan business is: \u201cI thought they were handling it.\u201d<\/p>\n
Your providers should work together as a team, but that doesn\u2019t mean they\u2019re interchangeable.<\/p>\n
A great advisor knows when something belongs with the TPA.<\/p>\n
A great TPA knows when something belongs with the attorney.<\/p>\n
And a smart plan sponsor knows enough to make sure the right question gets to the right person.<\/p>\n
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