Setting the Record Straight: The Role of a Recordkeeper

The role of recordkeeper is wide-ranging and complex. The amount of work done by recordkeepers often goes unnoticed. Some plan sponsors might not know about all the moving parts needed to maintain a plan — which include collaborative partnerships with advisors and TPAs. Let’s review some of the functions of a recordkeeper so you can help your clients better understand a recordkeeper’s role.

Simplifying the Complex

Recordkeepers help plan sponsors meet many of their responsibilities in a highly regulated environment. The Department of Labor and the Internal Revenue Service set regulations that all plans must follow. The rules required to maintain a compliant plan are complex. Recordkeepers work diligently with legal experts and TPAs to help the plan sponsor implement these updates. These changes often lead to new processes for plan sponsors and participants, who need more time and resources. SECURE 2.0 is a prime example of the provisions that recordkeepers must support.

Handling High Volumes With Ease

Recordkeeping teams handle thousands of tasks to keep things running smoothly. This includes monitoring eligibility, tracking contributions, processing investment changes, managing distributions, handling loan repayments, delivering participant statements and reporting. It’s also important to remind your clients that recordkeepers handle the day-to-day tasks of the plan but do so under the direction of the plan administrator. The plan sponsor serves as the plan administrator and works with service providers like recordkeepers, advisors and TPAs to run their plan.

Helping Guide Participants

Most participant requests are for loans and withdrawals. Recent research shows that employees use about 23% of their savings when they take out a loan or withdrawal from their retirement plan.¹ Many recordkeepers offer information on how these actions can impact retirement savings to gently guide them to other potential solutions. This complements the guidance you provide plan sponsors to help participants save more.

Administrative and Fiduciary Support

Some recordkeepers provide optional administrative services that may also include 3(16) fiduciary services. These services give plan sponsors the option for the recordkeeper to take on certain administrative tasks or shoulder fiduciary responsibility for certain plan duties. This can be helpful because plan sponsors often need reminders about their fiduciary responsibility. Some forget that even the selection of a recordkeeper makes them a plan fiduciary. Just be sure to understand what is and what is not covered, as not all fiduciary services are the same.

Learn more about how we stand apart from other recordkeepers and contact your local consultant.