Some 401(k) TPA firms have an internationally based subsidiary or outsource to international outsourcing firms. As the economy becomes more and more global, this should not be surprising. A variety of professional services, including accounting and legal services, are increasingly being outsourced abroad. International outsourcing is a trend that is likely to continue. Some employers may prefer to work with a firm that only has US operations. But, all employers will want to make sure that they understand how and where services are being delivered.
Questions that a plan sponsor will want to ask a 401(k) TPA that has an internationally based subsidiary or uses an international outsourcing firms include the following:
• Is the use of international providers fully disclosed at the beginning of the engagement and as services are provided each year?
• Are the international operations a wholly owned or an outsourcing firm?
• Where are the international operations located?
• What are the contingency plans for political instability?
• How are differences in time-zone handled?
• What work is done domestically, and what work is done internationally?
• Is our day-to-day contact US based or internationally based?
• What steps are taken to protect the confidentiality of our employee records and company data?
• What type of due diligence does the 401(k) TPA do on international operations and outsourcing firms?
• How are international staff trained and kept-up-to date?
• Are outsourced firms US based or international based? If international basis, what recourse does the plan sponsor have if there is an issue?
• How does the work being performed internationally affect pricing?
All of Nova 401(k) Associates employees are US based, and Nova 401(k) Associates does not have any operations abroad. Nova 401(k) Associates does not outsource any client work to overseas providers.
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