If you are planning to change the firm that administers your employees’ 401k plans, or the 401k vendor, consider the following tips:
1) Fees
Ed Moss, Senior Vice President of First Merit Corporation quotes “In determining what fee structure you can live with, keep in mind your preferred ratio of employer-paid costs to costs paid out of participants’ accounts. Know, too, that plan providers can get paid in ways that shift costs away from the sponsor and participants.”
Vendors will charge you fees based on either each transaction, fixed monthly charges, # of participants, etc.
2) Customer Service
– Is your customer server rep located near you or at a remote place? Remember face-to-face interaction with your Rep is much better than having someone 1000 miles away from you.
– Do they have a call center for tech and other support? Is it a convenient 1-800 number? How many hours is the call center in operation?
– Is the online tech support friendly and fast?
– How often are the retirement payments and loan cheques made out? Are they monthly, quarterly, semi-annually or annually?
– How fast are transactions recorded? Does the company offer an internet banking type of online account?
3) Compliance
Ed Moss, Senior Vice President of First Merit Corporation again quotes, “Filing Form 5500 with the IRS, reporting on distributions to be made from the plan, and conducting the very complex nondiscrimination testing to insure that your plan doesn’t benefit highly compensated employees more than the rest of the workforce all need to be someone’s designated responsibility.”
Ed Moss, Senior Vice President of First Merit Corporation quotes, “As a sponsor, a never-ending learning process accompanies the world of 401k plans — the more so if it has been many years since you last made a provider selection. The more questions you ask now, the more confident you’ll be that you’ve chosen a provider who will be a partner in ensuring your employees’ secure future.”
