Choosing the Right Third-Party Administrator: 6 Key Decision Factors for Companies

Posted on Feb 6, 2025

Selecting the right third-party administrator (TPA) is critical for businesses that want to efficiently manage their retirement plans. A TPA acts as an extension of your company, handling essential administrative functions while ensuring cost-effectiveness and regulatory compliance.  Here are 6 key factors for companies to consider when choosing a TPA:

1. Industry Experience and Expertise

Look for a TPA with proven experience across different types of plans. Regulations constantly evolve, and compliance failures can be costly. A reliable TPA should have deep in-house expertise in ERISA and other federal and state retirement plan regulations.

2. Technology and Data Security

A modern TPA should offer advanced technology solutions. Equally important is data security. Ensure the provider follows stringent cybersecurity protocols to protect sensitive information.

3. Cost Transparency and Flexibility

The right TPA provides clear pricing structures without hidden fees. Flexibility is also key—choose a TPA that can scale services to meet your company’s growing needs and adapt to changes in the industry.

4. Customer Service and Responsiveness

Exceptional customer service is non-negotiable. Your TPA should provide dedicated account management, prompt response times, and proactive support to resolve issues efficiently. Check customer reviews, references, recommendations, and testimonials.

5. Customization and Integration Capabilities

A good TPA offers customized solutions tailored to your business needs and integrates seamlessly with your existing systems.

6. CEFEX Certification

CEFEX (Centre for Fiduciary Excellence) certification is an important credential to consider when selecting a TPA. This certification ensures that the provider adheres to the highest fiduciary standards and best practices in plan administration. A CEFEX-certified TPA demonstrates a commitment to operational integrity, transparency, and regulatory compliance, providing businesses with added confidence in their selection.

This material is provided for informational purposes only, and is not intended as authoritative guidance, legal advice, or assurance of compliance with state and federal regulations.