Are Your TPAs Booking Journal Entries to Your Plan? Are You Sure?
As you know, plan sponsors of qualified employee benefit plans are responsible for maintaining and accurately reporting plan activity in order to ultimately provide benefits due to participants. In addition, the processing of the majority of transactions for employee benefit plans is outsourced to third party administrators (TPAs). As part of the oversight of outsourced activities, it is increasingly important to communicate with third party record keepers and custodians regarding any journal entries made to the plan's records. Journal entries in this case can be defined as any adjustment made to originally processed participant-level transaction activity. Third parties collect contributions and allocate them to participant accounts, process distribution and transfer requests, allocate expenses paid from the plan, process loans and allocate investment activity for transactions initiated by participants -- all constituting participant-level transaction activity. Therefore, any adjustments to such originally processed activity are meaningful to plan management and, as part of plan oversight, should be understood and reviewed as necessary.