CPAs, third-party administrators (TPAs), and attorneys can all provide specialized services to an employee benefit plan. All of these advisors play an important role in the process, which means collaboration is often essential. For example, when you’re drafting or updating plan documents, or if you’re experiencing ongoing compliance matters, all of your advisors likely have information and answers that are useful.
But each advisory group is responsible for a different area of focus. So as the Plan Administrator or Plan Sponsor, how do you know where to turn when specific questions arise? Here’s a look at their primary roles, which can help you determine when to call an employee benefit plan CPA, TPA, or attorney.
When Do You Call An Employee Benefit Plan CPA?
Once your plan reaches 100 participants, it meets the ERISA audit threshold. In general, meeting this threshold means your plan will be required to have a third-party CPA perform an independent audit of your plan’s financial statements. Working with an advisory firm with extensive experience with employee benefit plan audits is particularly important. More and more, the Federal Government is imposing sanctions on Plan Sponsors whose plans do not meet compliance requirements. While CPAs, TPAs, and attorneys all focus on IRS and DOL requirements, ERISA regulations, and federal and state laws, CPAs also consider Generally Accepted Audit Standards (GAAS) and related updates issued by the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board, and the independent ethical standards established by the AICPA Professional Ethics Executive Committee.
An employee benefit plan CPA can also provide consulting services. For example, if your plan is under the threshold, your CPA can help you with strategies to stay below the audit threshold. Or, if your plan requires an audit, they may be able to advise on strategies to increase participation and owner contributions. Although TPAs often prepare and file Form 5500 tax filings, an employee benefit plan CPA may perform this function in their absence. Specialized CPAs can also provide audit representation before the IRS or DOL and help you navigate the correction process, if necessary.
When Do You Call An Employee Benefit Plan TPA?
A third-party administrator (TPA) manages various day-to-day aspects of employee benefit plans. The TPA does not make plan decisions; that authority remains with the plan administrator as the plan’s fiduciary. The plan administrator sets the TPA’s authority and functions. A TPA of a 401(k) retirement plan may be retained to design retirement plan documents, prepare employer and employee benefit statements, ensure the plan complies with IRS and DOL requirements, and prepare annual forms and reports required by the DOL and IRS. The same is true for a TPA of an Employee Stock Ownership Plan (ESOP); however, in this case, the TPA may perform specialized services like repurchase option studies to help the ESOP ensure sustainability.
In general, qualified TPAs assist with annual documentation and reporting, such as:
- Summary Plan Documents
- Summary Annual Reports
- Annual valuations
- Participant benefit statements
- Updating participants on annual withholding requirements
- Monitoring and reporting for plan distributions
- Completing IRS Form 5500 and related schedules
- Annual audit package preparation for CPA or accounting firm
TPAs may also work closely with the plan sponsor to ensure the accuracy of plan records and reporting requirements related to:
- Employee eligibility
- Vested benefits
- Participant contributions, reports, fees, and distributions
- Qualified Domestic Relations Orders (QDROs)
- Required Minimum Distributions (RMDs)
- Employer contributions and calculations
- Employer census review
- For ESOPS, cost basis and segregation of employee share allocations
When Do You Call An Employee Benefit Plan Attorney?
Employee benefits plan attorneys can help you identify special issues and potential problems during the plan setup process and when drafting or updating plan documents. They also specialize in securities law compliance and issues related to employee compensation, including supplemental retirement, executive employment and severance arrangements, equity-based compensation, and bonus arrangements. You should consult an employee benefit plan attorney for securities transactions, corporate and partnership reorganizations, mergers and acquisitions.
Employee benefits lawyers assist employee benefit plans, plan trustees, and plan service providers with ERISA litigation disputes to prosecute and defend various fiduciary duty claims, including those challenging plan restrictions on coverage, arising from significant plan investment losses, and challenging plan amendments or terminations.
Contact Albin, Randall & Bennett
ARB’s Employee Benefits Advisory Services Team provides tax, accounting, and advisory services that are customized to the employee benefit plan’s specific needs. I help plan administrators and sponsors understand their responsibilities, and I work with clients to manage plan audits efficiently and cost-effectively. Contact me today to learn more.
by Benjamin A. Lord, CPA, CCIFP
Ben Lord is a Director at ARB specializing in audit and consulting services for employee benefit plans. Ben manages employee benefit plan audits in an efficient, cost-effective way by customizing services to meet a plan’s specific needs. He also specializes in consulting and financial accounting services for construction, real estate development, manufacturing, and professional services firms.