Anyone who works in the retirement plan industry has heard the complaint from advisors and plan sponsors alike: it’s getting harder to find a good TPA.
That shouldn’t surprise anyone. Being a third-party administrator today requires a combination of legal knowledge, technical expertise, and operational discipline that didn’t exist twenty years ago.
Administering a retirement plan used to be relatively straightforward. The rules were simpler, plan designs were more standardized, and compliance testing followed predictable patterns. Today, however, the regulatory environment has grown far more complex.
Consider just a few of the issues TPAs now handle routinely: SECURE 2.0 changes, safe harbor plan rules, coverage testing corrections, automatic enrollment compliance, Roth provisions, and the ever-present risk of operational errors. Each one of those areas can trigger IRS corrections, Department of Labor scrutiny, or participant complaints if handled improperly.
At the same time, industry consolidation has reduced the number of independent TPAs. Larger recordkeepers increasingly offer bundled services, and many smaller firms have been acquired or simply closed their doors as the regulatory burden grew.
The result is an industry where experienced administrators are in short supply.
It’s not unlike professional football. Every team wants a great quarterback, but there simply aren’t enough elite ones to go around. The same dynamic exists with TPAs. Everyone wants the experienced administrator who understands plan design, compliance testing, and operational risk.
But there are only so many of them.
For advisors and plan sponsors, the lesson is simple: when you find a good TPA, treat them like a franchise quarterback. Protect them, respect their expertise, and understand their value.
Because replacing them is far harder than you might think.
