Jump to content
Sign in to follow this  
goldtpa

Deconversion Fee

Recommended Posts

On a client who terminates and switches TPA, I am  curious as to how many TPAs are charging a deconversion fee or a fee to send copies of prior documents to new TPA.

Share this post


Link to post
Share on other sites
34 minutes ago, goldtpa said:

On a client who terminates and switches TPA, I am  curious as to how many TPAs are charging a deconversion fee or a fee to send copies of prior documents to new TPA.

I have most of my files in pdf format, and I won't charge for a simple email with attachments. 

My service agreement is set up to only charge for services actually performed, so the only fees upon termination of services would be for services performed but not yet billed and any services necessary for the transfer to the other TPA.   

Share this post


Link to post
Share on other sites

We tell the Client that they need to submit an itemized written request of items missing from their files.  There is no charge for providing documents at this time, but we will charge a "file retrieval fee" for requests made after a specified date.  This fee is applied after we transfer the file to storage, and reflects time needed to retrieve the file.  (We want ex-clients to address file items at the time service is discontinued.)  Items that are saved to pdf are provided without charge, as those remain on the server in archive.  We do include a section in our service agreement on this topic.

  • Like 1

Share this post


Link to post
Share on other sites

I have only worked for one TPA that charged pretty much all deconversations.  It included a few calls with the new TPA and client, and getting the data they new TPA wanted in a spreadsheet or text file format.  Because we charged for the service we always made it a priority to give transition services.

Most TPAs I worked for don't charge and you are entitled to a basic file with the census data and balance data and copies of the pdfs of important plan documents. 

Share this post


Link to post
Share on other sites

If it is a simple TPA change, there is generally not much of a charge, if one at all.  If there is a recordkeeping change, then that is another question entirely.

  • Like 1

Share this post


Link to post
Share on other sites

It all depends on what you really mean.  So many words have different meaning depending on who hears them and how they are used.  To me, "deconversion" is something a recordkeeper does, not a third party administrator.  Of course sometimes that is one and the same.  For us as a TPA firm, if someone needs documents or whatever that is already on file and easy to send; no problem and no fee.  But if it is a pooled account and they want allocations as of some mid-year date, then that's essentially a valuation requiring a fee. 

  • Like 2

Share this post


Link to post
Share on other sites

My experience is different.  Every new client we've had move their plan to us has been charged a deconversion fee by their prior service providers.  The worst one was a $1,200 fee for a deferral only plan that had 2 participants with balances and total assets of $600. 

 

Share this post


Link to post
Share on other sites
29 minutes ago, Kevin C said:

My experience is different.  Every new client we've had move their plan to us has been charged a deconversion fee by their prior service providers.  The worst one was a $1,200 fee for a deferral only plan that had 2 participants with balances and total assets of $600. 

 

Could that be paychex perhaps?  

Share this post


Link to post
Share on other sites

If it is a recordkeeper change, and not a TPA change, I would expect there to be a conversion fee, especially if there is a trust company involved.  There is a lot of work in the deconversion process and hard costs charged by the trust company for the final wire, etc.  The trust companies that we work will charge us a fee to close the plan on their end and that charge is done 2-3 months after the final wire.  There could be trailing dividends to work with and subsequent wires and reports due too.  Don't forget to mention that the recordkeeper is who the participants know and they will be fielding participant calls once the plan goes into blackout and usually for several months afterwards.  There are also things like final quarterly reports and dealing with auditors that need to be handled by the recordkeeper after the assets have gone.

  • Like 1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×
×
  • Create New...