I’ve never met a third-party administrator with a crystal ball. Some are excellent at finding problems, but none can analyze information that a plan sponsor keeps to itself. Yet sponsors sometimes expect their TPA to know about business changes without anyone mentioning them.
You bought another business. Your spouse started a company. You hired employees in another state. You paid a bonus through a separate payroll run. These events might seem unrelated to your retirement plan, but they can raise questions that your providers need to evaluate.
The problem is that business owners often decide for themselves which facts matter. They assume the new company is separate because it has a different name and tax identification number. They assume the bonus doesn’t count because nobody withheld deferrals. Those assumptions can send plan administration in the wrong direction.
Your TPA’s annual questionnaire deserves more attention than the terms and conditions you skip when downloading an app. Questions about ownership, employees, compensation, and other plans have a purpose. Answering “no changes” because you’re busy doesn’t make the changes disappear.
Communication should also happen during the year. Before completing an acquisition, changing payroll providers, or establishing another retirement plan, contact the professionals servicing your existing plan. Give them enough time to identify questions and involve other advisers when necessary.
That doesn’t mean every business decision requires an expensive legal opinion. It means your providers should have the opportunity to determine whether further review is needed. A short conversation before a transaction can be far more useful than a lengthy explanation afterward.
You’re paying for your TPA’s knowledge and experience. Give them accurate information so they can use both. Withholding facts, even unintentionally, makes their job harder and your plan more vulnerable.