How to Switch Your 401(k) Provider

401(k) plan conversions require:

• Asset Transfer

  The old provider is notified of service termination. The new provider establishes a timeline of blackout dates (lasting approximately 30-60 days). The new 401(k) provider then receives assets and records, which are then allocated via participant investment elections. The first payroll is processed shortly thereafter.

• Document Preparation

  The outgoing provider sends over plan documents. The new provider discusses plan change options with the employer. The employer reviews and approves new plan documents. A summary plan description is sent out to all eligible plan participants.

• Investment Selection

  The plan sponsor or financial advisor chooses the plan investment choices for participants to select. The 401(k) provider confirms the investment availability.

• Participant Enrollment

  After the old provider distributes blackout notices (30 days in advance) and the plan sponsor distributes enrollment materials, enrollment begins unless auto-enrollment has been selected as a plan feature.

Fortunately, switching to a new 401(k) provider is a fairly straightforward process. Typically, all tasks can be completed in 60 to 90 days–unless the outgoing provider requires additional lead time.

What should employees do after a 401(k) provider switch?

Employees typically do not have to do anything after a new 401(k) provider takes over.

They may, however, want to take this opportunity to look at how their portfolio is doing and make a few changes, taking advantage of new plan features if possible.

• Look over your allocations prior to conversion.
• Once the change is complete, double-check the accuracy of your investment choices and balances.
• Determine whether you wish to keep your contribution level the same or change it.
• Your employer’s contribution may have changed, so be sure you save enough to get the full match.
• If the match is going away, consider maxing out an IRA or Roth IRA before adding to your 401(k).
• Decide whether your risk tolerance and priorities have changed, and communicate with your advisor
• Look at the 404a-5 notice, which outlines the current funds in the plan, as well as the new plan lineup.
• It’s your prerogative to mirror your old fund’s asset class makeup or choose a new mix.
• Vet the expense ratio of the new funds to ensure that the fees are low.
• Take a few minutes to check out the new plan provider’s employee education portal.
• Don’t be afraid to ask questions if there is anything you do not understand.
• It’s okay to ask your sponsor or employer why a new 401(k) provider was sought.

Employers change 401(k) providers regularly – usually because they are dissatisfied with the current investment performance or the recordkeeper’s services and fees. Sometimes the current provider leaves the business or resigns from handling the company’s account. When companies are sold or merged, it’s customary for employees to switch to the new company’s plan.

Whatever the case may be, you’re in capable hands when you switch to one of Ubiquity’s 401(k) plans. Not only do we have the industry’s lowest flat fees, but we also provide full customer service to all employees, including retirement planning education and assistance.