Why Updating Your TPA Is Essential for Your Retirement Plan
Running a business means constant change. You may hire new employees, restructure ownership, or even purchase another company. What many business owners do not realize is that these changes directly affect how your retirement plan is managed. That is why keeping your Third-Party Administrator (TPA) updated is so important.
How Business Changes Affect Your Retirement Plan
Your retirement plan does not exist in a vacuum. Decisions you make throughout the year can shift how the plan operates and how it is tested for compliance. A few examples include:
- Hiring new employees or partners
- Buying or selling a business
- Restructuring ownership shares
- Experiencing major revenue changes
Each of these updates can influence compliance testing and plan design. Without accurate information, your plan could fall out of compliance, leading to costly corrections or penalties.
The Role of the Annual Compliance Questionnaire
To make the update process simple, we send out an Annual Compliance Questionnaire (ACQ). It is a straightforward way to check in with you once a year and gather any business updates that could affect your plan.
The ACQ covers key details such as:
- Who owns the business
- Whether you have purchased or are planning to purchase another company
- New hires, especially seasonal or large hiring surges
- Revenue highs or lows
Even if you are not sure whether something matters, sharing it with your TPA ensures your plan is properly aligned.
Controlled Groups and Compliance Testing
Some of the most significant compliance challenges come from changes in business ownership. If you acquire another business, you may inadvertently create what is known as a controlled group or an affiliated service group. These situations require special attention in how retirement plans are tested and administered.
Your TPA uses the information you provide to run accurate non-discrimination testing each year. This testing ensures your plan is fair, compliant, and structured in line with IRS requirements.
Why Timely Updates Build Stronger Plans
At its core, keeping your TPA updated is about partnership. We cannot anticipate the changes in your business unless you share them with us. The more we know, the better we can design and manage your retirement plan so it works for you, not against you.
The Bottom Line
Updating your TPA regularly is one of the simplest ways to protect your retirement plan. Tools like the Annual Compliance Questionnaire make it easy, but the responsibility to provide updates lies with business owners. By keeping your TPA in the loop, you ensure your plan stays compliant, effective, and aligned with your long-term goals.
