RPA Editorial Team
Do you know what you're paying for?
Selecting the right TPA to partner with can be challenging. Comparing TPAs can feel a complex puzzle with dozens of similar-looking options and dire consequences for a wrong choice. This process gets complicated even further by a confusing collection of additional services, options, and vague line items that tend to show up only as an unwelcome extra charge in the final bill. However, choosing wisely becomes much easier with the right understanding.
COST VS. VALUE Quality matters. Exceptional service, technical competency, and unwavering support are essential. Pricing should be logical, and transparent, so that you can clearly evaluate total costs and value. Be sure to consider the TPA’s credentials, reputation, track record, and ethics. A quality TPA will never compromise quality of service to compete on price, and you’ll reap the dividends by avoiding the risk of steep penalties and fines that discount providers will expose you to.
DON’T GET NICKEL AND DIMED Honesty and transparency are at the heart of fair pricing. Be careful not to fall victim to misleading TPA price tables. Discount firms will often post an annual administration fee that looks much lower than the competition, but that’s only because they’re leaving out the cost of essential services that they’ll bill extra fees for later. Tricks like this make it hard to predict what your plan will cost each year, and you can expect surprise invoices on a regular basis. Instead, demand a firm with integrity, one that consistently does the right thing for its clients, including clear and upfront pricing that gives the total cost of services without trying to sneak additional charges into the bottom line.
Trying to save a few dollars by choosing a budget TPA can incur a bevy of hidden costs, including:
» Continual add-on fees
» Constant plan issues requiring time from your staff
» Holes in service that require expert knowledge to rectify
» Significant errors that require amending prior years’ filings at substantial cost
» Penalties, fines, forced distributions, and even jail time
Be careful you don’t…
» Settle for an inferior quality TPA to save a few dollars
» Assume all TPAs are the same; TPAs are not commodities
» Fall victim to hidden fees
» Ignore your fiduciary responsibility to have a compliant plan
» Make your staff’s job harder
APPLES TO APPLES
Below is an actual pricing structure of a “discount” TPA, whose base administration package is quoted below market, but when add–on fees are factored in, the discount TPA will cost you more.
A quality full service TPA’s annual fixed administration fee should cover this list of services:
Cross testing, age weighting, complex document provisions, accepting late or incomplete data, projected testing and additional benefit payouts.
EXPERTISE PAYS Expertise has never been more important. As the ever-changing regulatory landscape becomes more complex, it’s important that you have a partner you can trust will help you meet your goals, whether they’re maximizing employer contributions, minimizing taxes, or offering employees a secure retirement through a defined benefit plan.