Changing Recordkeepers

[coleboy]

We have a client that really dislikes his current recordkeeper who is also doing the tpa services. He wants to transfer his plan over to a new recordkeeper and retain us as the tpa. A letter was sent by the client  stating that the plan be transferred as soon as possible to the new recordkeeper. The current recordkeeper came back stating that they could not do it until until 1/1/2018.

My question is are there any IRS regulations addressing the time frame that a recordkeeper has to transfer plan assets?

Thank you for any insight into this matter.

 

[Doghouse]

You would need to review the service agreement between the client and the recordkeeper. That's the first step, anyway.

[My 2 cents]

Yes.  Long before it becomes a regulatory issue, you need to verify that they are not violating the terms of the agreement by taking so long. 

To the extent relevant, protecting the interests of anyone NOT leaving from adverse consequences resulting from carrying out the request to transfer the money out has to be given a high priority.  Depending on the investments being maintained, that could lead to extensive delays in transferring money out, presumably in accordance with provisions in the contract.

Not that saying this proves much of anything, but I am not aware of any regulations (IRS or DOL) requiring quick action in response to contract termination requests. 

[Doghouse]

My point actually was that many service agreement require a certain amount of advance notice. In many cases, this may be as much as 180 days (although that usually applies for larger plans).

[Bill Presson]

So it's basically 60 days. For a transfer to be done in good order, I always recommend between 60-90 days. It generally has to be at least 30 days because of the blackout notice. Longer than 90 days is a bit ridiculous.

And in this case, I would want it to be 1/1 or shortly after and let the other group handle all the 2017 filings anyway.

[MoJo]

How much time does the new recordkeeper need?  For incoming plans, we generally require AT LEAST 90 days.  Keep in mind, a blackout notice needs to go out at least 30 days in advance, and fee disclosure and ... and...

For outgoing plans (deconversions) we schedule them based on capacity.  We have already closed 2/1/18.  Next available dates are into February, or 3/1/18.

We are a volume shop (500 or so plans in each year, 300 or so out).

Fast and wrong is still wrong....

[hr for me]

I agree that you have to balance how quickly the data can be pulled from the prior recordkeeper (and you are facing the holiday season and the end of a lot of plan years) and then the upload/conversion to the new recordkeeper.  I've seen most take 60-90 days unless there is something large/out of the ordinary that can't be mapped easily. 

But at 11/1 unless it was a really small plan, I wouldn't expect it to be able to be done by 1/1/18.