If there is one opinion that I have that is argued about many times is my two cents in the use of the largest payroll providers being in the Third Party Administration (TPA) business. Usually, the people who criticize my opinion tend to work for those payroll providers.<\/p>\n
My opinion is my opinion, it\u2019s based on 18 years experience as an ERISA attorney, I doubt you can say my opinion is biased since I haven\u2019t worked for a TPA since 2007.<\/p>\n
I believe that the TPA business is a very tough job, it just shouldn\u2019t be someone\u2019s ancillary business if you just see it as just an offshoot of your primary business. My problem with payroll provider TPAs is that they require too much of the plan sponsor to do the heavy lifting, aren\u2019t very creative in plan design, and they take an assembly line approach to retirement plans. Henry Ford once said you could pick the color of a Model T as long as it was black. Offering retirement plans on some sort of plain vanilla prototype with no discussion of other designs and combo plans with cash balance or defined benefit is malpractice if it costs the plan sponsor money by not maximizing the use of employer contributions.<\/p>\n
The McDonalds approach to fast food is fine, but retirement plans administration isn\u2019t something that you could quickly push out. Payroll Provider TPAs aren\u2019t a black or white issue; I\u2019m sure a three employee company using safe harbor 401(k) might be a good fit. For most plan sponsors, it\u2019s not. I\u2019ve seen less problems with standalone TPAs than those two big payroll providers in terms of issues and plan errors. Standalone TPAs have less of a churn rate than payroll provider TPAs, they have larger plans, more plans under administration, and are more efficient in plan design. In addition, What payroll provider TPAs forget to tell you is that if you fire them as a TPA, they\u2019ll fire you as a payroll customer and that payroll integration they talk about is something they offer to other plan providers like Empower. If payroll integration is such a big deal, why do they offer it to competing TPAs?<\/p>\n
Again, it\u2019s my opinion based on 18 years of experience. Believe me, I\u2019d make more money as an ERISA attorney by keeping my mouth shut about this because when you speak out against these big payroll providers, they don\u2019t refer you much business.<\/p>\n
<\/span><\/p>","protected":false},"excerpt":{"rendered":" If there is one opinion that I have that is argued about many times is my two cents in the use of the largest payroll providers being in the Third Party Administration (TPA) business. Usually, the people who criticize my … Continue reading