What Should Plan Sponsors Look for in a Terminating Plan Service Provider?

#1 – Deliver a full range of services including:

  • Mailing of required participant notices
  • Participant address verification
  • Multi-lingual call center support for responding participants
  • Safe Harbor IRAs for unresponsive participants

#2 – Have expertise in locating missing participants

The DOL is very specific about what is required if a participant is deemed to be “missing”. When selecting an outsourced provider make sure they have a proven track record of fulfilling those requirements including:

  • Verification of/updates to participants’ last best-known address
  • Locating beneficiaries of deceased participants
  • Utilization of multiple web-based resources
  • Oversight of USPS Certified mailing

#3 – Focus on minimizing cash outs and promoting account consolidation

Unfortunately, many participants will be tempted to cash out their retirement savings during a plan termination.

To help reduce cash outs and increase retirement account consolidation to an existing account, like a new employer’s plan, make sure the provider has professionals who will provide distribution counseling.

#4 – Offer fiduciary-friendly Safe Harbor IRAs and on-going account support

  • Continuous efforts made to locate missing account holders
  • Straightforward, easy-to-understand fee structure
  • Monthly account maintenance fee vs. annual fee
  • No lock-up provisions
  • Ability to move assets to more suitable investment options
  • Account consolidation service

#5 – Have a proven track record in facilitating plan terminations:

  • How long they’ve handled terminating plans
  • The number of terminating plans they’ve worked with
  • The mix of large vs. small plans

Working with the right plan termination service provider can alleviate a lot of headaches and save a lot of time. To learn more about the plan termination services of RCH call 1-866-827-9608 or email sales@rch1.com.

Next Topic: Get More Information on Terminating Plans

Terminating a 401(k) Plan - Selecting a Service Provider

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