Retirement Plan Services Agreement: Understanding the Basics
As you plan for your retirement, one of the most important things to consider is a retirement plan. And with the help of a retirement plan services agreement, you can ensure that you have a sound plan in place to help you achieve your financial goals.
A retirement plan services agreement is a contract between an employer and a third-party administrator (TPA) who will take charge of the plan`s administration. The TPA will help manage the plan, handle compliance-related issues, and provide fiduciary support as needed.
The agreement should spell out all the services that the TPA will provide as well as the fees involved. Some of the services you can expect in a retirement plan services agreement include plan design, compliance testing, record-keeping, and investment management.
Plan Design
The first step in developing a retirement plan is to design it to meet the specific needs of your organization and its employees. The TPA will work with your company to understand its goals and then design a plan that is tailored to meet those goals. This could include selecting the right type of plan (such as a 401(k), profit-sharing, or defined benefit plan), determining eligibility requirements, establishing contribution limits, and outlining plan features such as vesting schedules and borrowing provisions.
Compliance Testing
Retirement plans are subject to an array of complex regulations and requirements. The TPA will ensure that your plan meets all the regulatory requirements set forth by the IRS, the Department of Labor, and other governing bodies. They will conduct annual nondiscrimination testing to ensure that the plan does not unfairly favor highly compensated employees. The TPA will also ensure that the plan satisfies all required contribution limits, annual reporting requirements, and other compliance-related tasks.
Record Keeping
The TPA will keep track of all employees` contributions to the retirement plan, including employer and employee contributions, rollovers, and loan payments. They will ensure that employees receive account statements and that those statements accurately reflect the employee`s balance and investment decisions.
Investment Management
Lastly, the TPA will help you manage the investments within the retirement plan. They will assist in selecting investment options that align with your company`s goals and employees` risk tolerance. The TPA will also provide ongoing monitoring and reporting of the investments` performance.
In conclusion, a retirement plan services agreement is an essential part of planning for the future. It outlines the services that a TPA will provide to help manage the plan, handle compliance-related issues, and provide fiduciary support. As you consider your retirement plan options, it is essential to work with a trusted TPA who can guide you through the process and ensure that your plan`s design, compliance, record-keeping, and investment management meet all regulatory requirements.