Why Use a TPA

A third party administrator (TPA) is a firm outside of the sponsoring company and outside of the investment advisor. The TPA administers a retirement plan and insures its compliance with the applicable and ever-changing laws and regulations.

Choosing to use a separate TPA, financial representative and investment provider is an approach called "unbundled". This is in opposition to the "bundled" approach where a single company (typically the investment firm) provides the administration, record keeping, investments and communications.

In the past few years there has been a strong trend for plan sponsors to use TPA's and unbundled plan services, primarily because compliance with pension laws is very technical and complicated. The TPA is the specialist who helps the client comply with these laws to maintain the plan's tax qualification status.

Having a TPA is also preferable for the following reasons:

  • TPA's provide local, full time, personal service, with staff dedicated to your plan versus interfacing with an out of state call center that uses team service, with no specific knowledge of your plan.

  • TPA's offer a proactive approach to the administration of your plan, with an eye towards the right changes and advice for your plan ahead of and in anticipation of the law, versus a bundled system that only reacts to changes.

  • TPA's create a plan that is specific to your needs versus the one size fits all approach of the bundled plans.

  • Unbundled services divulge all fees, allowing the client to determine the value for their dollar, versus a bundled program, where administration and other fees may be hidden to create the illusion of lower priced services.