Consulting Services
Plan Conversion & Mergers
Converting or merging 401(k) plans requires careful planning and execution to ensure a smooth transition for plan participants and compliance with regulatory requirements. Here are some topics for consideration. If you have any questions concerning the following topics, please schedule an appointment to discuss.
Define Objectives
Clearly define the objectives and rationale for the plan conversion or merger, such as consolidating multiple plans, improving plan efficiency, reducing costs, or enhancing participant services.
Conduct Due Diligence
Perform a thorough review of the existing 401(k) plans involved in the conversion or merger, including plan documents, investment options, administrative procedures, participant data, and service provider agreements.
Engage Legal and Compliance Experts
Consult with legal counsel, ERISA consultants, and other compliance experts to ensure compliance with regulatory requirements and fiduciary responsibilities throughout the conversion or merger process.
Communicate with Stakeholders
Communicate with key stakeholders, including plan sponsors, plan participants, plan administrators, service providers, and regulatory agencies, to inform them about the planned conversion or merger and address any concerns or questions.
Develop Conversion/Merger Plan
Develop a detailed plan outlining the steps, timelines, responsibilities, and resources required for the conversion or merger process. Assign roles and responsibilities to designated individuals or teams responsible for overseeing the implementation.
Address Plan Design Considerations
Evaluate plan design considerations, such as eligibility criteria, vesting schedules, contribution limits, investment options, participant communication methods, and administrative procedures, to ensure alignment with the objectives of the conversion or merger.
Negotiate Agreements with Service Providers
Review existing service provider agreements and negotiate new agreements or amendments with service providers, such as recordkeepers, trustees, investment managers, advisors, and third-party administrators, as needed to support the converted or merged plan.
Conduct Participant Education
Provide comprehensive education and communication to plan participants about the conversion or merger process, including changes to the plan structure, investment options, contribution rules, and participant services. Offer opportunities for participants to ask questions and seek clarification.
Transfer Plan Assets and Data
Coordinate the transfer of plan assets, participant accounts, and administrative data from the old plan(s) to the new plan or merged plan. Ensure accurate recordkeeping and reconciliation of participant data to minimize errors and discrepancies.
Conduct Compliance Testing and Reporting
Perform required compliance testing, such as nondiscrimination testing (e.g., ADP/ACP testing, top-heavy testing), and prepare necessary filings, such as Form 5500, to report the conversion or merger to regulatory agencies in accordance with applicable deadlines.
Monitor Transition Process
Monitor the progress of the conversion or merger process closely to identify and address any issues or obstacles promptly. Maintain open lines of communication with all stakeholders to provide updates and resolve issues as they arise.
Review and Evaluate Results
After completing the conversion or merger, conduct a comprehensive review and evaluation of the process, outcomes, and performance of the converted or merged plan. Assess the effectiveness of the conversion or merger in achieving the intended objectives and identify lessons learned for future initiatives.
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