Due to the increasing complexity of managing and recordkeeping employer-sponsored retirement plans, some organizations are leaning towards outsourced solutions for their administration. By outsourcing, this allows recordkeepers to have a smarter, leaner path to risk management, improve plan compliance, enhance employee satisfaction, and reduce administrative burdens. This white paper explores why outsourcing retirement plan administration and recordkeeping services for a strategic smart business model that is a cost-effective move for retirement plans of all sizes.
Margie Brown, Principal Consultant
Managing plan documents, ensuring compliance with contractual agreements and obligations, and overseeing the day-to-day operations in-house requires significant time, expertise, and staffing of services which internally encompasses a broad spectrum of roles and responsibilities.
- Plan Design & Optimization: Ensuring plan documents are updated in line with regulatory changes and discretionary amendments.
- Regulatory Compliance: Keeping up with the Department of Labor (DOL), Internal Revenue Code and ERISA requirements is time-consuming and requires specialized expertise.
- Client and Participant Support: Meeting deadlines, understanding plan features, and guiding retirement readiness requires accurate and timely service from knowledgeable staff.
These responsibilities can be overwhelming and a challenge to hire and retain staff with the expertise, necessary experience, focus, and dedication to support a successful organization in this industry.
Three Core Benefits of Outsourcing Retirement Plan Administration
- Improved Compliance and Accuracy
A professional outsource organization is equipped with experts to ensure plans meet Department of Labor and Internal Revenue Service standards, including timely preparing and filing of the Form 5500, performing nondiscrimination testing, plan restatements, discretionary and mandatory plan amendments.
- Operational Efficiency
Outsourcing providers streamline operations and provide dedicated plan support. This reduces time and cost of training internal staff, decreases human resources overhead, and frees internal teams to focus on strategic initiatives and company objectives.
- Predictable Cost and Savings
While there is a cost for outsourcing, they are often offset with the cost of internal labor and staffing
readiness. Services are customized to the economies of scale from an experienced outsourcing provider that can offer competitive pricing and flexible costing models.
Outsourcing Models
Organizations can select from a range of outsourcing models tailored to their specific needs. Below are several common scenarios.
Critical Considerations When Selecting an Outsourcing Provider
- Vendor Due Diligence: Description of the role(s) as part of the outsourcing services needed. Evaluate what experience, expertise, and service level agreements (SLAs) you are seeking to meet your objective.
- Transparent Fee Structure: Understand costs and descriptions in the Statement of Work (SOW).
- Scalability: Select a partner who can grow with your organization that offers continuous support and collaboration, enabling the ongoing delivery of tailored solutions that evolve with your organization’s needs.
The Business Case for Outsourcing
Outsourcing retirement plan administration and recordkeeping services offers a clear strategic advantage for organizations seeking to reduce risk, manage costs more effectively, and deliver stronger retirement outcomes for their clients. In an industry defined by strict regulatory oversight, partnering with an experienced outsourcing provider delivers not only ensures compliance, but also creates measurable financial and operational value,
By aligning with the right partner, organizations can free internal resources, scale capabilities as needed and maintain the flexibility to adapt to evolving business and regulatory demands, positioning themselves for long-term success in the retirement plan marketplace.
Next Steps
To determine if outsourcing is the right move for your organization:
- Define Your Needs – Identify the administrative, compliance, and support functions that would benefit most from external expertise.
- Evaluate Providers – Assess experience, industry knowledge, technology platforms and service-level commitments.
- Review Cost Models – Compare total outsourcing costs against current internal staffing and overhead.
- Plan for Integration – Establish a transition plan with clear timelines, roles and communication protocols.
Contact our Retirement Plan Compliance Services team at compliance@enterpriseiron.com to discuss how we can help streamline your operations and enhance your compliance strategy.”