This posting is a follow-up to “All About Black-Out Periods” posted here. In that posting we talked about what a black-out period is, and what the plan administrator’s responsibilities are for reporting the black-out period to its Plan’s participants.
In this posting, I would like to share with you additional action items the Plan administrator should take immediately before and after the Black-Out period to ensure the proper transfer of participant investments and other balances.
1) Have all participant funds transferred over from the prior TPA/service provider to the current TPA/service provider? As a plan administrator you will want to obtain a final investment (by dollar) report from the old TPA just prior to transfer. This report is sometimes referred to as a transfer report, and the detail can be as limited to the total dollar amount transferred; to as detailed as “total dollar amount transferred by participant, by fund type, and by contribution type”. I would recommend you obtain as detailed report as possible. Next you will want to obtain a report from the new TPA which shows funds transferred-in. Again, the level of detail on this report may vary, and I recommend you obtain the most detailed report. Finally, you will want to reconcile the total investment dollars per the report received from the old TPA to the investment report received from the new TPA. If the reports are detailed by person, it would be advisable to reconcile a sample of individual’s account transfers for propriety.
2) Will the new TPA offer the same investments? If the investments change, how am I comfortable that the old investments are properly mapped to the new investments? When you were making the decision to find a new TPA, the new TPA probably notified you that they did or did not have the same funds offered by your old TPA. Your new TPA will most likely recommend some of their available funds that most closely resemble the funds of your old TPA. If your new TPA does offer new funds, then you could request a mapping report from the new TPA. The mapping report will show where the old funds will be invested in the new funds offered by the new TPA. It would be also be advisable to verify that the funds mapped over correctly after the transfer. This verification can be done with the reconciliations in #1 above.
3) Do I need to be concerned with participants deferral elective deferral %’s after the transition? Generally, if the Plan sponsor is responsible for payroll and calculating and withholding deferrals, then there are no additional reconciliations required when changing TPA’s. However, if both the old TPA and the new TPA are responsible for participant elective deferrals, you will want to communicate with the TPAs, as to how they will ensure proper transfer of participant elective deferral %s.
4) What about participant loan balances? How are those transferred from the old TPA to the new TPA? Similar to the reports in #1 above, the old TPA should be able to provide a loan report by person that they transferred over to the new TPA. Additionally, the new TPA should be able to provide you with a report that shows the loan balances by person, received. It would be advisable to reconcile a sample of individual’s loan transfers for propriety.
5) What about educating the participants on how to use the new TPA website, or how to access investment statements? Depending on the services you contracted with your new TPA, the new TPA can generally visit your office(s) and offer educational classes to your participants on how to use the new website and investment statements. Alternatively, the new TPA can offer you educational material that can subsequently be passed out to participants.