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Taking the fear out of plan conversions

Jun 26, 2020

When’s the last time you changed your 401(k) plan service provider?

Plan sponsors are often reluctant to make a change in service providers — even when it’s clear they need to pull the trigger sooner rather than later. If you’re unhappy with your current provider or plan, or you question whether you’re getting enough value, it’s time to make a change. But it’s not surprising if you’re worried about how to make the change or how it will impact your organization.

If any of the following concerns are preventing you from changing providers, our team is here to help alleviate the stress surrounding plan conversions:

1. “Our staff does not have the time to commit to completing a plan conversion.”

Wipfli, in coordination with the plan’s investment advisor, does the heavy lifting to make the transition easy for you and your team. This includes providing a timeline, explaining the entire process, taking care of paperwork and scheduling employee meetings. We ensure that the conversion process is completed with as little interruption to your staff as possible.

This solution requires a well-defined process and hands-on conversion team so you can understand and communicate the conversion process quickly and easily to employees.

2. “In this volatile market, we do not want our plan out of the market for weeks.”

Our goal with all plan conversions is to minimize the time out of the market. Our plan conversion team completes the process in one to two business days following the date that we receive the reports and wire from the prior TPA.

In addition, a transfer in-kind from the prior TPA can also be considered in order to limit the transfer of investments to one business day.

3. “We are content with our current provider(s).”

Your current investment advisor may be holding periodic investment committee meetings and providing employee education, but are you receiving the value you could be? Your provider should be:

  • Providing a detailed fee analysis with a breakdown of all types of fees paid to the service provider, plus benchmarking those fees to similar-sized plans in your industry.
  • Analyzing participation and contribution rates for your plan, in addition to benchmarking to similar-sized plans in your industry.
  • Discussing plan design with you to understand whether there are any pain points with the plan (e.g., highly paid employees cannot maximize their contributions, no matching contribution to encourage participation/ineffective matching formula that does not encourage higher contribution rates).
  • Explaining legislative changes and how they impact your plan.

4. “Our staff does not want to learn a new process.”

Most recordkeepers have similar processes and systems. The Wipfli team provides a demonstration of our participant and sponsor websites and walks you through the contribution upload, distribution, loan, and year-end data collection process. We are your partner and are  available at any time to answer questions or troubleshoot issues to ensure the transition process is not burdensome for your staff.

Additionally, if your company outsources your payroll, we coordinate with your provider to ensure that we are able to access files each payroll period, with minimum involvement from your staff.

Plus, we have an internal payroll processing team, so if your current payroll process is not working well, we can provide both services to fully integrate payroll with the retirement plan.

5. “Our current investments have surrender charges.”

We analyze the impact of surrender changes for each participant prior to recommending a plan conversion. In many cases, the benefit of transferring the plan to a low-cost, index-based investment approach will outweigh the under-performance and high cost of those investments with the surrender charges.

6. “Our employees are not interested in the plan.”

Consider why they are not interested. Maybe they do not understand how it works or are intimidated by investments. Do you offer an employer-matching contribution that encourages their participation? Do you offer employee education specific to the plan?

Employee engagement in the plan can be increased with short and simple education materials and one-on-one employee meetings for those that will not enroll on their own.

Take the fear out of your plan conversion

Click here to learn more about our retirement plan services, or continue reading on:

5 recent developments to retirement plans you should know

5 signs your retirement plan is due for a checkup

5 retirement plan trends for your business


Angie Whiteside, CPA
Senior Manager
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