In prior entries, we have discussed a variety of issues related to the fee disclosure responsibilities of broker/dealers and financial advisors. This month, we'll address the impact of the 408(b)(2) disclosure regulations on third party administrators.
Unlike broker/dealers and financial advisors, who often don't have written agreements with their retirement plan clients, TPAs have historically described the services that will be provided and the fees that will be charged for such services in their client service agreements.
TPAs typically receive compensation for administrative services, often including a base fee and a per-participant fee, as well as fees for processing transactions (e.g., loans, QDROs, and distributions). Many TPAs also provide consulting services, for which they typically receive hourly fees.
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