The central role of the recordkeeper can create reverberations with other providers should the plan sponsor attempt to change recordkeepers. Any hiccup in the employees’ ability to manage their retirement assets can cause problems for plan sponsors.
Tag "recordkeeper"
Nobody’s perfect. It’s unfair to expect recordkeepers to be. Everyone makes mistakes—even recordkeepers. The problem is what happens when a mistake occurs.
How do you solve, for example, the problem of integration between the payroll software and the 401k recordkeeper’s website?
How do we design and administer retirement plans?
In theory, 401k plans were always intended to be highly portable, but that’s not what happened. “Portability” only evolved to the extent that the most-attractive balances were picked off and rolled over to IRAs, and everyone else was left holding the bag.
It’s not just plan sponsors and plan participants that need convincing. The entire retirement plan infrastructure must also get on board. That doesn’t mean the hurdles can’t be overcome.
Despite this, 401k plan sponsors can better protect their employees, even when it comes to personal data, because that data is only acquired within the context of the service provider’s relationship to the plan.
Nonetheless, there is a way to short-circuit this time-frame. You can do it, but you’ve got to really want to do it.
There are many different types of plans, particularly when plan sponsors pick a 3(21) or 3(38) adviser. Which service provider arrangement a plan sponsor chooses impacts how the IPS will be constructed – and how the relevant parties contribute to that draft.
It’s safer to assume you don’t know everything – and here’s a list that begins to define that everything.
