Your organization’s talent is a critical resource and key to navigating the future. In today’s everevolving human resources landscape, integrating an effective retirement plan has become a cornerstone for attracting and retaining top talent. Managing your retirement plan, however, requires significant expertise and resources, which is why using a third-party administrator (TPA) has gained significant traction.
I’ll share four benefits of using retirement TPA and how this can be a game-changer in your talent management strategy.
1.Configure Retirement Plans TPAs help configure retirement plans to cater to the needs of your workforce. A good TPA comprehensively understands your organization’s objectives, employee populations, and human resource demands. Historically, plan configuration typically focused on the plan design itself.
While there is a cost to engage a TPA, the long-term benefits often outweigh the expenses. TPAs can identify costsaving opportunities within retirement plans and help avoid costly regulatory fines
Forward-thinking TPAs, however, also assess the recordkeeper’s digital capabilities, the payroll company’s services, and employee trends. The TPA can recommend how to create easier administration for a seamless and cohesive employee experience. For example, a TPA may point out that if you have millennial and Generation Y employees, it can be important to have a robust mobile app, chat capabilities, and easy web access to information. Or, if an organization has a lot of part-time employees, the TPA can help identify how the payroll company, recordkeeper, and TPA can work together seamlessly to adjust to the new long-term, part-time worker requirement under SECURE 2.0.
2. Increase Plan Efficiency Using TPAs can streamline processes, which leads to quicker and more efficient planning events. Examples include:
- Initially setting up a retirement plan or transferring to a new provider
- Year-end testing and taking care of the substantial number of checks and balances required at year-end to ensure plan compliance (and yes, the DOL and IRS may check up on your plan)
Good TPAs make your experience as seamless as possible, taking most of the heavy lifting off of your plate. Your TPA should be able to store your prior year’s results, confirm data accuracy, and, when needed, integrate with your payroll vendor to obtain data.
3.Provide Educational Resources and Support
Retirement plans are governed by an extensive list of complex rules. It can be helpful to partner with a TPA who can provide simple guidance to make your job easier and offer clear explanations on what’s necessary to be compliant so you don’t have to become an ERISA expert. A TPA can help ensure you have a participant communication strategy that engages participants and encourages them to enroll in the plan and save for retirement.
4. Reduce costs While there is a cost to engage a TPA, the long-term benefits often outweigh the expenses. TPAs can identify cost-saving opportunities within retirement plans and help avoid costly regulatory fines. The time and resources you save your HR department, however, can be the biggest potential impact. Administrative duties required to successfully manage a retirement plan can be substantial, especially when you are not ingrained in the process. Depending on your partnership, TPAs can support various models, and for some companies, this means completely taking over the day-to-day administration for HR professionals. This would allow the HR department to redirect resources to other strategic initiatives.
Conclusion Choosing to use a TPA in your HR strategy is more than an administrative decision. Rather, it is a commitment to the health and compliance of your plan and the retirement readiness of your employees. Partnering with a TPA for your retirement plan can improve communication and efficiency while offering a critical benefit to attract and retain key employees.
