What Businesses Need to Know about Switching 401k Providers

As a way to ensure your employees’ long-term financial security and overall well-being, 401k plans should be an essential part of every company’s benefits plan. As with any type of financial service, the quality of your provider’s customer service plays a critical role. Differentiators like education, support, and fee transparency can make or break the retirement benefits you offer. 

If your current retirement plan isn’t meeting your needs, it may be time to make the switch to a new provider. But how do you go about doing that? Here’s what to look for when considering a 401k switch. 

Key Factors to Consider When Switching Providers 

Are you experiencing poor customer service? 

Experiencing long call wait times, impersonal auto-reply emails, or just a general lack of sufficient answers? With any financial service, customer service is critical. People want to be sure their money and their future are in good hands. There is no better way to show that importance than through the customer service provided.  

Service is way more than just an automated helpline or general email. People need actual help and advice. Your provider should provide access to experts who can guide you through the plan setup, management, and any potential issues that may arise. The ability to speak to a real person allows you to receive the guidance and clarity you need. Ensure the provider you’re considering is committed to delivering superior customer service every step of the way. 

Does your 401k provider handle the day-to-day work? 

You likely have a lot on your plate at work—a seemingly never-ending list of tasks to keep your plan running and compliant! Switching providers can not only give you time back, but also peace of mind. 

With plan administration, an important thing to know is whether or not your provider offers 3(16) fiduciary services. A 3(16) fiduciary can manage the day-to-day administrative work of a 401(k) plan. This enables you to avoid the often time-consuming and typically costly plan administration. 

Additionally, with so many regulations governing 401k plans, you need the comfort of knowing your company is compliant with all the rules so that you can maximize the tax benefits to you and your employees. 

Netchex 401k, powered by Vestwell offers bundled 3(16) fiduciary services with our retirement plans and compliance support at no extra charge. This means you can spend more time running your business and less time doing administrative and compliance work. 

Is your retirement plan simple to manage and use? 

The right 401(k) plan provider will simplify the experience for both you and your employees. 

Notably, you should find a provider with payroll integration to make administering a retirement plan much easier.  

Automate contributions and ensure accuracy by directly connecting your retirement plan to your payroll system. This allows for accurate and timely updates in sync with salary changes, simplifying plan administration. 

Ideally, your 401k provider should also have a simple, intuitive platform so that your employees are able to access the data they need via a comprehensive dashboard. When the platform is more user-friendly, a greater number of employees are likely to actively participate and make informed decisions regarding their retirement savings. 

Are you overpaying while your provider underwhelms? 

As the employer, you need to know the money you are getting a return on the money you spend. Some providers may have hidden fees or charge premiums without delivering equally high-quality services. Are there setup, administration, or service fees that weren’t initially clear? 

Always request a detailed breakdown of fees and compare them to the benefits received, like advanced tech features or robust customer support. Consider providers offering transparent, fair pricing that directly correlates with the service and support they deliver. 

Will your plan evolve alongside your business? 

As your business grows, your service providers need to be able to manage your growth and any new needs as they arise. For instance, a recently expanded company may find that its current plan doesn’t scale effectively or offer the flexibility required for a larger, more diverse workforce. 

The provider you choose should offer a flexible plan design that can scale with your business. You should be able to customize the features you want, choose investment options that work for your employees, and make changes in the future as you grow. 

Steps for a Smooth 401(k) Plan Conversion 

One of the scariest parts of any conversion process is not fully knowing what to expect. Thankfully, Netchex + Vestwell are here for you every step of the way. There are four main steps involved in switching 401(k) providers.  

Initiate the asset transfer: When switching, your new provider will work with your old one to coordinate the transfer of important records and assets. 

Rewrite or amend your plan document: Review your old plan document with your new provider and discuss any necessary changes. Some changes cannot take effect until the start of the new plan year and require advance notice to eligible employees. 

Choose your investments: Select investment options that cater to your employees’ varying risk appetites and financial goals. 

Educate and enroll employees: Ensure that your employees understand how to enroll, set their desired salary deferrals, and select from the available investment options. 

Throughout the conversion process, it’s important to maintain open communication channels. If you offer a plan through Netchex + Vestwell, we will help you keep your employees informed and ensure the transition goes smoothly. 

Discover how Netchex can help your make the switch to a better 401k provider and administration: