3(16) Services as a TPA

[mjf06241972]

Anyone offer 3(16) services as a TPA?  What details can you provide with regard to experiences?  Thank you.

[ratherbereading]

We have just started doing so.  It's working out well so far, but it's only been a couple of months.

[Pam Shoup]

We have been doing this for several years.  The first thing that I would recommend is to review whether you are a 3(16) for some services and not others and whether you will be named as a 3(16) by service agreement or go the full monty and be named as the Plan Administrator in the Plan Document, as well as signing the 5500 form as the Plan Administrator.  Make sure that your administrative service agreement is explicit on what services you are providing as a 3(16) and what services you are providing as a TPA. (I highly recommend the Ferenczy Law Group for a service agreement review).  Educate your staff on the importance of every single transaction that they touch.  Make sure that you have well documented procedures and that they are followed every single time.  If you are a recordkeeper, make sure that you are doing your annual SOC 1 audit.  Purchase fiduciary liability insurance and review with your carrier what to do in the case of a breach.  Document, document document and educate everyone (your staff and your clients) what it means to be a 3(16) and that you have the responsibility and the liability for whatever level of services you have agreed to provide as a 3(16).

With all of this being said, it is a lot easier (and less expensive) to make sure that each transaction is done correctly as they occur, instead of fixing a mistake later that was done by someone who is not educated in the world of retirement plans.

[mjf06241972]

Thanks for the information Pam.