When it comes to the biggest plan conversion complication, there wasn’t much contest in this week’s NAPA Net reader poll.
In fact, among NAPA Net poll respondents, poor data quality was such a dominant factor it actually showed up in multiple categories in the top five:
- Missing and/or wrong SSNs, no DOBs, or no addresses
- Lack of accurate (or reasonable) data
- Obtaining historical data from the current vendor
As one reader explained, “I find it frustrating that when a piece of business is in conversion, old recordkeepers and/or TPA’s will cling to the plan data and docs out of spite or hurt feelings. I have found that communicating directly with the old providers and empathizing with them (I have lost plans too) can make some difference. A colleague of mine will inform the old parties that they do not have discretion and have to act in a directed manner just like we do.”
That said, the second most cited complicating issue was “Making sure that the salesperson has not promised provisions that severely complicate administration.” Rounding out the top five was Takeover Loans — which, when you think about it, is probably also a data issue. In fact, respondents indicated that that was the most common (as opposed to biggest) pitfall in conversions.
Other pitfalls cited were:
- Identifying the unique issues with each conversion.
- Getting copies of testing if performed by prior provider after asset transfer.
- Unique issues are a big problem when the incumbent and new vendor do not use the same approach for accommodating the issue.
- Dealing with companies like *** or *** who have their own timeline to move assets, in spite of all the paperwork being in order.
- Obtaining a signed copy of the document
- Loans
- Dealing with non-cooperative ex-administrators
- Money that is invested in a GIC or has a put
- Inexperienced conversion team on the vendor side (forces adviser to take on more work)
- Hardship available amounts
- Obtaining the current plan document and amendments
- Obtaining information from the current vendor
- Employers failing to distributing notices in a timely manner
One reader shared the following conversion tale: “We were in the air traipsing across the country doing education meetings (client owned the plane!!) and got a call from my admin asking why there would be over $1 million in the forfeiture account — for a $20 million plan. After a bit of digging, we discovered that the prior RK had not allocated the forfeitures in quite a few years. We had to create accounts for participants who had long left the company, distribute the forfeitures, then pay these folks out. Quite a project!!!!!”
But to the question of conversion pitfall stories, another reader said simply, “Not really. Only complaints! Lol!”
Thanks to everyone who participated in our weekly reader poll!
Got a suggestion for a future question? Something you’d like to ask NAPA-Net readers? Post it in the comments section below, or email me at [email protected].
