Search For New 401(k) Provider

[Guest DBS1]

I've been using this site for over 10 years in my various positions and love the level of expertise so this is my first stop. I am in a new position at a large company (3,000+ ees). The day I accepted the position, the 401(k) recordkeeper "fired" us so my first assignment is an RFP. We have a safe harbor 401(k) with a leveraged ESOP match so that might limit us, but we are considering removing that feature to retain the right recordkeeper. We have a Roth feature as well. Three loan limit. Nothing out of the ordinary for a large plan.

Anyway, let me get to the point. We are a "big fish" and we need comprehensive services that allow company stock, collective trusts, actively managed funds, and target date funds. No brokerage. I am sending the RFP to the "big fish bowls" - Fidelity, Citistreet, Principal, etc. But I wanted to ask if anyone has a favorable (or unfavorable) opinion or experience with providers. We are under the gun to get this in place by mid-February. I know, it seems impossible, but with benefit plans, we all know nothing is impossible, right?

If I did not provide enough info, please post and I'll fill in the blanks.

ANY HELP at all is greatly appreciated! Thank you!

[masteff]

You'll find people on both sides of the aisle regarding Fidelity but overall I was happy with them during my 8 years at prior job. We had 4 plans, 4500 employees w/ half again as many retirees, unitized stock funds, and our own GIC fund.

During the time we had two plan mergers, so I did work w/ their transition team. I found them to be very competent.

My only caveat for ongoing admin (whoever you pick) is take all the time necessary upfront to get the plan's rules coded correctly. And then double and triple check it. Also work closely on the phone rep documentation so they're giving out the right info (because just as sure as they fall back to a generality, your plan will be the 1% exception).

Oh, and plan to have weekly phone calls for the first 6-12 months and probably biweekly after that. And have them maintain an "issues and actions" report for the phone calls so nothing gets lost in the shuffle.

[QDROphile]

Don't expect to be able to comply with all applicable law if you are with Fidelity. The Fidelity system is the law once you are in it.

[GBurns]

If you send the RFP to those like Fidelity etc, Aren't you going to be restricted to using their funds only? Or do they have an ASO type service also ?

[masteff]

As far as I know, all the "big fish" allow for a large portion of the mutual fund universe, not just their own. But it is something to consider... will they allow outside funds and how difficult do they make it to add to your investment lineup.

[Kevin C]

Make sure you understand the actual services they will provide and what areas you are responsible for. Most of the "big fish bowls" don't provide all of the services needed for the operation of the plan. For example, are you going to be responsible for determining eligibility? calculating contribution amounts by person? identifying HCE and Key Employees? Are you required to certify their testing results? Does their contract place all the responsibility for everything on you?

If you have the time and expertise to complete the services they don't provide, they may be a good fit. If not, you will likely have problems down the road.

One example. One of our clients left us for one of your named "big fish bowls". They were a law firm with a deferral only 401(k) plan covering only the associates and a profit sharing plan covering everyone else. Both plans had plan years ending 1/31. The first ADP test the "big fish bowl" prepared included a space for them to sign certifying that the results were accurate and complete. They asked us to review the test for them. The test was for the calendar year and included all employees of the firm, most of whom were not eligible for the 401(k) plan. Other than testing the wrong time period and the wrong group of people, I guess the testing was ok.