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AS DISCUSSED IN THIS WHITE PAPER , PLAN FIDUCIARIES SHOULD CONSIDER THE FOLLOWING WHEN FACED WITH A RECORDKEEPER MERGER OR ACQUISITION THAT AFFECTS THE PLAN :
Where the plan ’ s recordkeeper is being acquired by another recordkeeper , is the acquiring recordkeeper appropriate for the plan when compared to other available recordkeepers ?
What process should the plan fiduciaries use to evaluate potential recordkeepers ?
DOES AN RFP PROCESS MAKE SENSE ?
• An RFP process may make sense , for example , if the plan has not assessed the recordkeeping market for some time or has undergone a significant change in terms of size or other metrics . Note , however , that an RFP process is not legally required .
• While an RFP may not make sense in the smaller plan market due to cost considerations , fiduciaries should undertake a benchmarking process to evaluate the strengths and weaknesses of a recordkeeper .
DOES A BENCHMARKING PROCESS MAKE SENSE ?
• A benchmarking process may make sense , for example , if the plan recently conducted an RFP process and collected information on the capabilities and pricing ranges of different recordkeepers . Note that plan fiduciaries could seek the assistance of an adviser , consultant , or third-party administrator in conducting a benchmarking process .
Are plan fiduciaries considering relevant information regarding recordkeeping services , including the following ?
• The recordkeeper ’ s reputation in the market place and experience providing services to plans of similar size and needs .
• Available fee arrangements ( including how revenue sharing payments from investment options could be used by the plan ).
• Available scope and quality of services .
• Amounts and types of fees charged for services ( including what services are included in the base price and what services are provided at extra cost ).
• The terms of the recordkeeping contract ( including limitation of liability , indemnity , data security , participant advice , etc .).
• Potential conflicts of interest .
• Litigation or enforcement actions involving the recordkeeper .
Are plan fiduciaries evaluating investments made available on the recordkeeper ’ s platform based solely on their economic merit ?
Are there potential pricing benefits to selecting investments that are managed by the recordkeeper ’ s affiliate if such investments are appropriate for the plan based solely on their economic merit ?
Explore NATDA 401 ( K ) Group Plan Solutions ( GPS ): Jeff J . Kim , CFP ® - 424.258.0787 | jkim @ larchmont401k . com Larchmont401K . com / NATDA
Information regarding retirement plans is general and is not intended as ERISA , legal , or tax advice . Retirement plans are complex , and the federal and state laws or regulations on which they are based vary for each type of plan and are subject to change . Plan sponsors and plan administrators may wish to seek the advice of legal counsel or a tax professional to address their specific situations . Transamerica is not affiliated with Groom Law Group .
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