Learn what to look for in a provider when you're dealing with DC plan termination. (Photo: Getty)

Terminating a retirement plan takes a lot of work, a lot of planning and requires specialized skills. 

Not surprisingly, most fiduciaries choose to outsource plan terminations to service providers.

Selecting an outsourced provider is a critical decision. To help simplify the process, we suggest using the five criteria below (and scroll down to watch the video that discusses those key criteria) for selecting a plan termination services provider:


1. Check that the provider delivers a full range of services including the following:

  • Mailing of required participant notices

  • Participant address verification

  • Multi-lingual call center support for responding participants

  • Safe Harbor IRAs for unresponsive participants


2. Confirm the provider has expertise in locating missing participants.

The DOL is very specific about what is required if a participant is deemed to be “missing”. When selecting an outsourced provider make sure they have a proven track record of fulfilling those requirements including the following:

  • Verification of/updates to participants’ last best-known address

  • Locating beneficiaries of deceased participants

  • Utilization of multiple web-based resources

  • Oversight of USPS Certified mailing


3. Provider should focus on minimizing cash outs and promoting account consolidation.

Unfortunately, many participants will be tempted to cash out their retirement savings during a plan termination.

To help reduce cash outs and increase retirement account consolidation to an existing account, like a new employer’s plan, make sure the provider has professionals who will provide distribution counseling.


4. Be sure the provider offers fiduciary-friendly Safe Harbor IRAs and on-going account support.

  • Continuous efforts made to locate missing account holders

  • Straightforward, easy-to-understand fee structure

  • Monthly account maintenance fee vs. annual fee

  • No lock-up provisions

  • Ability to move assets to more suitable investment options

  • Account consolidation assistance


5.  Make sure the provider has a proven track record in facilitating plan terminations.

  • How long they’ve handled terminating plans

  • The number of terminating plans they’ve worked with

  • The mix of large vs. small plans


This is the third video of a three-part series on DC plan terminations, presented by Mike Wilder, Vice President of Client Services, Retirement Clearinghouse.