We have a saying at the firm. The best recordkeeper conversion is the one you don’t have to do. However, the only thing worse than going through a recordkeeping conversion is the pain of tolerating an underperforming provider or the cost of overpaying for an incumbent.
Transitioning your retirement plan from one recordkeeper to another can be a complex and significant undertaking. Over the course of four blogs, we will walk you through our guide, which is designed to assist employers in successfully navigating the challenges of such transitions while offering best practices to ensure a seamless experience for both plan sponsors and participants.
First up, helping you understand recordkeeper transitions.
What Is a Recordkeeper Transition?
A recordkeeper transition involves transferring the administration and management of your retirement plan from one service provider to another. This change is typically motivated by the desire to enhance participant services, improve plan sponsor service, or reduce overall plan costs.
Key Stages of a Recordkeeper Transition
A recordkeeper transition comprises several essential stages that collectively ensure a successful transition.
- Contracting: Establishing a comprehensive service agreement with the new recordkeeper.
- Timeline Development: Crafting a realistic timeline that aligns with the complexities of the transition.
- Communication Plan Development: Creating an effective communication strategy to inform employers and participants about the changes.
- Data Collection and Testing: Carefully collect and meticulously test data to ensure accuracy and reliability.
- Employee Communication: Regularly update participants on the progress and implications of the transition.
- Asset Transfer and Reconciliation: Transferring plan assets and reconciling data to ensure a smooth handover.
- Go-Live and Post-Transition Activities: Launching the new system and ensuring participants are well-informed and comfortable with the changes.
Timeline and Considerations
While transition timelines can vary significantly, a typical recordkeeper transition takes 12 – 20 weeks. The most important factors impacting a transition's timing are the plan sponsor's availability to support and review the transition process and the responsiveness of the incumbent provider being replaced. A smooth transition will require data from the current provider to be supplied to the new provider before a transition so that the new provider can understand the nature and structure of the plan and participant data. The longer it takes to receive and review a sample data file, the longer the transition process will take.
Our next blog in this series will discuss successful transition preparation, the transition process, and the benefits of developing a clear timeline.
You can download our full guide, Navigating Retirement Plan Transitions, here.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.