FAQ’s for Retirement/401(k) Plan Sponsors and Administrators
What does a Third Party Administrator (TPA) do?
A TPA is an organization hired by the 401k plan sponsor (your employer, usually) to run many day-to-day activities of your retirement plans. Their responsibilities include, but are not limited to:
- Amending and restating plan documents
- Preparing employer and employee benefit statements
- Assisting in processing all types of distributions from the plan
- Preparing loan paperwork for plan participant
- Testing the plan each year to gauge its compliance with all IRS non-discrimination requirements as well as plan and participant contribution limits
- Allocation of employer contributions and forfeitures
- Calculating participant vested percentages
- Preparing annual returns and reports required by IRS, DOL or other government agencies.
What's the difference between a TPA and a "Bundled Provider"?
The chart below compares typical services offered under a TPA/Unbundled and a Bundled (non TPA) provider.
|
|
TPA/UNBUNDLED |
BUNDLED |
|---|---|---|
|
|
|
|
|
|
|
|
|
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Annual Plan Limits*
Each year the U.S. government adjusts the limits for qualified plans and Social Security to reflect cost of living
adjustments and changes in the law. Many of these limits are based on the "plan year" as defined in the plan document.
The elective deferral and catch-up limits are always based on the calendar year.
|
2015 |
2014 |
2013 |
2012 |
|
|
Compensation |
$265,000 |
$260,000 |
$255,000 |
$250,000 |
|
Limits on benefits and contributions: |
||||
|
$53,000 |
$52,000 |
$51,000 |
$50,000 |
|
$210,000 |
$210,000 |
$205,000 |
$200,000 |
|
$18,000 |
$17,500 |
$17,500 |
$17,000 |
|
$12,500 |
$12,000 |
$12,000 |
$11,500 |
|
$5,500 |
$5,500 |
$5,500 |
$5,000 |
|
Catch-up contributions: |
||||
|
$6,000 |
$5,500 |
$5,500 |
$5,500 |
|
$3,000 |
$2,500 |
$2,500 |
$2,500 |
|
$1,000 |
$1,000 |
$1,000 |
$1,000 |
|
"Highly Compensated" definition |
$120,000 |
$115,000 |
$115,000 |
$115,000 |
|
"Key Employee" definition: |
||||
|
$170,000 |
$170,000 |
$165,000 |
$165,000 |
|
$150,000 |
$150,000 |
$150,000 |
$150,000 |
|
Social Security Taxable wage base |
$118,500 |
$117,000 |
$113,700 |
$110,100 |
| *Source: Internal Revenue Service | ||||
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