TaxLawyer1978

What documents needed to replace Recordkeeper/Trustee?

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My client is replacing their current plan Recordkeeper and Trustee (MetLIfe) and switching to another company.  What documents do I need to prepare to effectuate that? Is it just resolutions regarding the plan? Do all participants have to approve this reconversion? Never done this before.

Thanks

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When my clients switch recordkeepers--say from Nationwide to John Hancock,  we didn't do any resolution and the participants didn't have to approve, but they were notified.  Usually there is a team at the new provider to assist you. There may be paperwork from the MetLife the client will need to complete.  I'm not sure if my situation is exactly like yours, though. 

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1 hour ago, TaxLawyer1978 said:

Thanks.  This is even though we're moving funds from one trust to another?  

The transfers that I've dealt with aren't consider moving from one trust to another, so I don't want to give you the wrong answer.  Maybe someone else will pipe in! In my instances, everything is staying the same, just the funds are going from one investment house to another.

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Are you sure Metlife is the trustee of the plan?  It has been a while since I worked daily 4k plan using there various platforms but I don't ever recall a company like Metlife being the legal trustee of the 401(k) plan.  It was the reocrdkeeper but not trustee.  Who made the decision to change from Metlife?  The person making that decision is often times both the Plan Administrator and Trustee of the plan.   Unless there is a very large plan at which time those roles might be split.  

If it is just a change in recordkeepers I agree with Karoline there are a bunch of notices regarding blackout periods that have very strict rules around them.  There all kinds of notices about fund mapping and so forth you need to make sure get done.  Those blackout notices have timelines that need to be kept.  However, the new recordkeeper often times have a conversion group to help guide you through those kinds of processes.  There are people who do daily 4k work still on this board who can give you better details regarding all of that.

If somehow Metlife is the legal trustee a change to a new trustee takes a resolutions.   I am just doubtful they the plan's trustee.  

None of this requires the consent of the participants. 

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ESOP guy, this is a very large account, not a 401k plan, but DC and TDA plans.  Current trustee/recordkeeper is MetLife.  Moving over to Prudential, with Prudential Bank & Trust Company being the new record keepr and FSB being the new Trustee.  I assume that will require resolutions, based on what you're saying.  That appears to be what Prudential said to the client but I haven't spoken to them yet.  Where would I find info on the appropriate notices that need to go out to the participants?   Thanks

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Typically in these situations, if there is a trustee change, we will have the plan fiduciary adopt a plan that will address the blackout and transfer issues and show that they have considered options and made rational decision.

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Luke Bailey, what do you mean by adopt a plan? What kind of a plan do you have in mind? When I think of a plan, I'm thinking the 403b/DC plan. 

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Oftentimes when a recordkeeper is being replaced, they will have your client sign on to their Adoption Agreement to enable them to service your account better since they are more familiar with the provisions.  Included in this would be the appointment of a Trustee.  Both the employer and the Trustees would need to sign this document.  As with any Plan documents, a Board Resolution would accompany that and be signed by the appropriate people.  Participants do not sign off on anything, however, as stated by others they must be notified and if there is any blackout period whereby they are not able to direct their investments (assuming it is participant directed), take a loan or a distribution (assuming these are available) then blackout notices must be provided indicating the time period that these will be unavailable and giving them the time to make changes or requests before the blackout begins.

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Agree with what has been said thus far---a Trustee agreement should also be in the mix, but it might be incorporated in the Adoption Agreement mentioned above. Certainly a resolution adding the new Trustee is in order. Relius has a good set of forms to accomplish this in their ERISA library.

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10 hours ago, TaxLawyer1978 said:

ESOP guy, this is a very large account, not a 401k plan, but DC and TDA plans.  Current trustee/recordkeeper is MetLife.  Moving over to Prudential, with Prudential Bank & Trust Company being the new record keepr and FSB being the new Trustee.  I assume that will require resolutions, based on what you're saying.  That appears to be what Prudential said to the client but I haven't spoken to them yet.  Where would I find info on the appropriate notices that need to go out to the participants?   Thanks

Changing recordkeeper does not require modifications to the plan document; changing trustees does.  That means you need a corporate resolution showing the removal of the old trustees and the appointing of the new ones.  We also have the new ones sign the resolution to show that they have accepted the role of trustee.  You also need a SMM (Summary of Material Modification) that notifies the participants about the change.    The participants have no say in this matter; their "permission" is not ever required.  You say you have a VERY LARGE ACCOUNT; I assume you mean many participants.  Could you imagine the chaos that would result if participant approval was required?

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TaxLawyer1978, what I meant by a "plan" is a written document, mayb3 3 to 5 pages, that has whereas's and resolveds  and that sets out (a) that you are doing a recordkeeper and trustee change, and the identity of the players, (b) the date of the change, (c) whether you are going to map or liquidate participant accounts, and any financial measures put in place to deal with market volatility, (c) the communications to participants, including of course blackout notice, and similar factors. It's a document that the plan committee can adopt as a record that at a very high level it understood it's fiduciary duties and addressed them. If it were a plan merger, then both committees would adopt. This is separate from the more detailed roadmap that the vendors will put together for the vendor change, that has the account and wire details, etc.

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I've had two takeovers (take-aways) recently.  In each case, a new Plan Document and Adoption Agreement were executed by the Employer.  One went to Paychex (using an Ascensus Prototype) and one to Vanguard (presumably their own document/adoption agreement).  One was originally a pooled account (PSP to 401(k)), the other was John Hancock mapped to Vanguard with blackout, etc.  Corporate Resolutions were part of the process.

It was made clear there was no termination or merger, etc.  Simply a switch of investments under the Trust (restated as part of the document/adoption agreement).  New terms "Custodian", "Directed Trustee" were incorporated.

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