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.




Service Model

-  #1 Deliverable: Consulting

Call and speak with the same people you are familiar with

-  Fast, clear responses to questions and requests

-  #1 Deliverable: Administration

Call center at an 800 number

-  Limited access to expertise (how is this quantified?)

Plan Flexibility

-  Discuss plan design based onw hat benefits your company most

Design changes are quick and simple

-  Choose from standardized options

-  Changing provisions is subject to process

Investment Flexibility

-  Choose your investment options from several platforms

-  If your needs change, we service several platforms and aid in the asset transfer

-  If you change platforms, your plan document continues to serve

-  The bundled provider is  your only platform option

- In many cases, if  your needs change, you may need to find a new provider (in all cases?)

-  In many cases, if you change providers, you may need a new document at a new cost (in all cases?)

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.











Limits on benefits and contributions:

  • Defined contribution plans





  • Defined benefit plans





  • 401(k), 403(b) and 457 plan elective deferrals





  • SIMPLE plan elective deferrals





  • IRA





Catch-up contributions:

  • 401(k), 403(b) and 457 plans





  • SIMPLE plans





  • IRA





"Highly Compensated" definition





"Key Employee" definition:

  • Officer





  • 1% owner





Social Security Taxable wage base





*Source: Internal Revenue Service        


100+ Years of Experience
Established in 1909, Independence Financial Partners' history is a testament to our dedication to our clients. Today, our full service firm serves Southern New England from its main offices in Warwick, Rhode Island and Rocky Hill, Connecticut.

About Us
Independence Financial Partners has been helping individuals, families and businesses achieve their financial goals for over 100 years.



We strive to help clients grow and preserve their investments and businesses
through genuine partnership and deep expertise.

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935 Jefferson Blvd
Suite 2000
          Warwick, RI 02886

100 Corporate Place
Suite 210
          Rocky Hill, CT 06067

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