A family member once said: \u201cthere are a lot of yous (sic) and only one me.\u201d That may not be the nicest and most selfless thing to say, but that\u2019s something retirement plan sponsors should think when it comes to the needs of the retirement plan. Maybe Captain Kirk said it best in Star Trek III, when he contradicted the viewpoint of Captain Spock who gave his life to save the Enterprise at the end of Star Trek II by saying: \u2018the needs of the one outweigh the needs of the many.\u201d The needs of the retirement plan sponsor\u2019s plan outweigh the needs of the retirement plan providers.<\/p>\n
A retirement plan sponsor always needs what is best for the retirement plan and if their current plan provider can\u2019t handle what they need, it\u2019s time to wave goodbye. There are too many third party administrators (TPA) who don\u2019t have the flexibility to administer plan provisions or different retirement plans that a plan sponsor needs. If what\u2019s best for a plan sponsor that they have a defined benefit plan in addition to a 401(k) plan to maximize the retirement savings of their highly paid people and their current TPA can\u2019t handle it, it\u2019s best to find a TPA who can. Otherwise, the plan sponsor can\u2019t maximize retirement savings and Uncle Sam gets more tax dollars.<\/p>\n
I recently came across a retirement plan sponsor that has a plan with two adopting employers where there is some common ownership, but not enough to be a controlled group. By not being in a controlled group, these three companies have to bee separated for testing purposes. The incumbent TPA said they can\u2019t handle this type of plan (the plan is now considered a multiple employer plan) and the plan sponsor would have to set up separate plans for the companies, which would unnecessarily drive up administration costs.<\/p>\n
A plan sponsor has a fiduciary responsibility to the plan, not the plan sponsor. If the plan provider no longer fits, it\u2019s time to find one that does, like a glove.<\/p>\n
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