Retirement Clearinghouse (RCH) is pleased to offer a three-part series of educational videos on plan terminations, presented by Mike Wilder, RCH’s Vice President of Client Services. These videos are intended to provide plan sponsors with a basic understanding of key plan termination process steps, the common mistakes that are made by plan sponsors, and the key criteria for selecting a plan termination services provider. We hope you’ll find these videos interesting & informative!
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DC Plan Termination - Five Criteria for Selecting a Services Provider
Terminating a retirement plan takes a lot of work, a lot of planning and requires specialized skills. Not surprisingly, most fiduciaries choose to outsource plan terminations to service providers.
Selecting an outsourced provider is a critical decision. To help simplify the process we suggest using the five criteria below.
#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 assistance
#5 – 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 866.827.9608 or email firstname.lastname@example.org.
Previous video: Common Mistakes Plan Sponsors Make (part 2 of the three-part series)