Issues to Consider When Changing Recordkeepers

These are a few of the primary issues to consider when changing recordkeepers:


Plan Documents


Many new recordkeepers insist that documents be restated onto their own document. If the plan is being restated, a thorough review and comparison of plan provisions, including both the prior and new adoption agreement and base plan document must be made for:

  • Consistency. The new document should be consistent with the sponsor’s intent/prior documents.

  • Protected Benefits. These provisions must be identified and preserved.

  • Potential Cutbacks. Identification of changes that may affect an already accrued benefit.

  • Potential for Operational Errors. Identification of any differences that may create potential for operational errors.

  • Document Compliance. Verification of compliance back to beginning of the plan or a favorable determination letter, if any.

  • Reliance on Vendor IRS Letter. Consideration whether to adopt a non-standardized prototype vs. a volume submitter and whether a determination letter can or should be requested.

  • Related Employers. If covered, related employers generally need to adopt the agreement, if excluded the document needs to exclude them.

  • New Summary Plan Description. Comparison to new plan document.

Service Agreements


Service agreements (both the current agreement which is terminating as well as the agreement with the new recordkeeper) also warrant a careful review. See the October 2016 issue of Boutwell Fay Benefits News which can be found here for a discussion of the many complex issues to consider when entering in to a new service agreement. These include, for example: fees, proper parties, termination provisions, indemnity provisions, record keeping obligations, limitations on liability, standards of care.


Other Issues


  • Compliance Issues. Such as coordinating data and filing responsibility for Form 5500 for the year of the transition, filing any needed (or required) VCP submission.

  • Blackout Periods/Notices to Participants. Black out notices need to be sent out to participants at least 30days prior to any black out period.

  • Investments. Decisions must be made whether investments will be mapped, deposited into default funds or if participants will make new elections.

  • Loans. Decisions must be made about how loans will be transferred and whether any clean up is needed beforehand.

  • Data Transfer/Privacy. Ensuring all needed data is transferred, and the transfer is done in a secure manner.

  • Timing. Many employers prefer to make changes at the end of the plan year, however recordkeepers are often inundated with year-end mergers and may not be able to accommodate this timing.

If you would like more information regarding issues to consider when changing recordkeepers, or other employee benefits matters, please contact us.


This information does not constitute legal or tax advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. Anyone reading this information should not act upon this information without seeking professional counsel. The information contained herein is valid as of the date presented, and should not be relied upon after that date.



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