Retirement Plan TPA Internal Controls Part III

November 8, 2012 at 6:10 pm Leave a comment

Internal controls are important to me because they help reduce fraud and errors. Does your retirement plan TPA have proper internal controls?  Your TPA will be handling confidential employee information and financial data.  One of the controls that should be in place is independent internal verification (Kimmel, P., Kieso, D., and Weygandt, J.  Financial Accounting: Tools for Business Decision Making, 6th ed.  (2011).  Danvers, MA:  John Wiley & Sons, Inc., pp. 344).  As a consumer, I feel it is imperative that you check these controls when choosing a TPA.

Does the TPA have a separate individual responsible for reviewing reports and testing from the administrator preparing them?   A second set of eyes never hurts for accuracy.  In addition, it decreases the potential for an unethical employees to engage in behavior that might disqualify your plan.  Nothing is fool-proof as an error may go undetected or an unethical employee may manage to circumvent the process without being caught, but a separate reviewer and review procedure helps increase your odds of quality service.

I recommend doing your research and ensuring you have found the best.  You need to confirm that basic controls are in place.  My experience is those who have no interest in procedures and quality review will give you every song and dance to explain why you do not need solid controls.  They are also the ones who eventually will cost you thousands of dollars in fines and corrections later down the road.

I discuss more on determining TPA qualifications in my book, A Short Guide to Finding a High Value, Low Fee Third Party Administrator (TPA) for Your Retirement Plan, available at and My goal is to help plan sponsors make the best decision they can when selecting a  TPA.  I understand how difficult a decision this can be when you do not know what skills and credentials to look for.  I have created this book to ease the process and enable plan sponsors to make good choices through my insights from working in the industry.

Thanks for reading and have a wonderful day!   Please be sure to sign up for my blog and follow me on twitter.

I am not selling my own or any one else’s TPA services through this blog or my book.

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Participant Retirement Plan Government Agency Resources GAO Recommendation Regarding Pension Premiums

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Christine Gurney

A pension professional who shares her thoughts and ideas about the pension world for industry members and anyone else interested.

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