Ubiquity

How to Switch Your 401(k) Provider

Ubiquity Retirement + Savings has been an affordable provider of retirement solutions, designed for small businesses, start-ups, and solopreneurs since 1999.

  • Streamlined, flat-fee plans starting at $75/month
  • Easy online set-up and management
  • Flexible investment options
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Employees generally do not need to “roll over” their 401(k)s if the employer changes retirement providers, since the new provider assumes administrative duties and undertakes a “plan conversion.”

In other words, you don’t have to do anything to ensure continuity of benefits. However, there are a few steps you may want to take once the conversion happens to ensure your retirement savings plan is how you want it.

What happens during a 401(k) plan conversion?

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.

What happens during the blackout period?

Under normal circumstances, you can simply make a phone call or hop on a website to change your investments. However, during a 401(k) provider switch, there will be a short duration of time where you’re locked out of the plan. If you have any pressing concerns about your account, you’ll need to decide whether you have to make those changes immediately or if you can wait. The blackout can be as short as a few days or as long as two months.

A plan changeover requires a good deal of administrative activity, which can be complicated if employees are all trying to select new investments, take out loans, or making withdrawals at the same time. During the blackout, all your contributions will continue being invested, and any loan repayments are credited to your account.

401(k) provider changes can benefit employees

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.

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© 2020 Ubiquity Retirement + Savings
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44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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© 2020 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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