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Locating a 401(k) provider: what to do when a client asks for help.

When a client asks for advice on establishing a 401(k) pension plan, many CPAs are not on comfortable ground. While they may have a general knowledge of pension plans, they probably lack the in-depth know-how to offer specific advice. In fact, they may even be hesitant to recommend to the client just any pension specialist. After all, if the recommendation doesn't work out, the CPA's relationship with the client may be jeopardized.

We asked a compensation consultant and CPA, Keith A. Tobias, executive vice-president of Compensation Resource Group, Inc., Menlo Park, California, what advice he gives CPAs confronted with this problem. His counsel follows.

There are many pension consulting firms that provide 401(k) services, which include design, administration and, in some cases, fund management. Such firms fall into two groups: large, national firms with regional offices and small providers dedicated to limited geographical areas, usually the cities where they are situated. Smaller providers are in the majority.

Probably the best way to locate a local provider is through a CPA firm's network of business contacts. For a comprehensive list of national firms with regional offices, including the services they provide, see "The Art of Choosing a Retirement Package," by Kathleen Cahill, in the May 1992 CFO Magazine. The process by which a client selects a provider should resemble an audit that examines the following:

* Staying power. Is the provider a sole practitioner? In general, it's best to engage a firm with several professionals. Since a 401(k) could last for 50 years or more, the CPA should believe the provider will be able to serve the client long-term.

* References. Good client references are usually indicators of whether a provider can be recommended. Even large providers should be carefully evaluated.

* On-site observation. A CPA should visit the provider's office to get a feel for how it's run. It's surprising how much such a visit reveals about the professionalism of a consulting firm.

---Stanley Zarowin
COPYRIGHT 1992 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:A Resource for Small Businesses
Author:Zarowin, Stanley
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Aug 1, 1992
Words:325
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