Here are some highlights of a recent article, The Value of a Good TPA, written by an ERISA attorney:

·         The TPA is the glue that holds the retirement plan together.  The TPA handles the day to day administration of the plan, including distributions, discrimination testing, asset reconciliation, and governmental filings.

·         The good TPA offers an invaluable service because their work preserves the tax qualification of retirement plans, thereby preserving the plan sponsor's tax deductions for plan contributions, and the tax deferred status of the participants' retirement savings.

·         The TPA insures proper plan compliance and helps to minimize the plan sponsor's liability since they have been delegated with the job of handling the plan sponsor's function as plan administrator.

·         The good TPA will not only be the third party administrator, but also a consultant and a major back office support that will help the plan sponsor navigate the calamitous waters of plan sponsorship and limit their liability.

·         A good TPA can be part of your inner circle of advisors.

·         When looking for a TPA, concentrate on their level of service and their expertise, instead of solely on the amount of their fee.  Sometimes you get what you pay for; sometimes it costs more down the line by going with the low cost provider.