RPF M6 U1 Preparation for a Simple Conversion Flashcards
Study
What is a Blackout Period?
A Blackout Period is any period of more than three consecutive business days during which participants’ ability to direct or diversify assets is temporarily suspended.
What is meant by Conversion in the context of retirement plans?
Conversion refers to a change from one provider to another involving the transfer of plan assets.
What is a Letter of Intent?
A Letter of Intent is a communication sent to the successor provider indicating the plan sponsor’s decision to switch providers before a formal service agreement is signed.
What are Mapped Investments?
Mapped investments are the investment options of the successor provider that closely resemble those of the prior provider, allowing participants to avoid making new investment elections.
What is a Qualified Default Investment Alternative (QDIA)?
A QDIA is a default investment used to invest a participant’s money if they do not choose an investment, designed to minimize the risk of large losses.
What factors can lead plan sponsors to change service providers?
Factors include the desire to achieve plan goals, better use of technology, dissatisfaction with investment performance, costs of providing the plan, quality of service, and changes in the management team.
What triggers the start of the conversion timeline?
The start of the conversion timeline is triggered by the employer notifying the prior provider that the business relationship is ending and signing the contract with the successor provider.
What is involved in the Employee Communication step of the conversion process?
Participants must be notified of changes to the plan and its investments, including new features or investments prior to funds being invested with the successor provider.
What is the purpose of the Blackout Period?
The Blackout Period serves to put new plan transactions on hold while the transfer of assets is accomplished.
What happens during the Transfer of Data/Creating Participant Accounts step?
The data for individual account information is transferred from the prior provider to the successor provider, allowing for the setup of accounts and allocation of assets.
What is the significance of the Reinvestment of Assets/Data Reconciliation step?
This step checks that the total amount of plan assets transferred equals the total allocated to individual participants; discrepancies may extend the blackout period.
What does the Resume Standard Procedures step entail?
This step involves ensuring all required information has been received and the plan is ready to be referred to the regular administration department for ongoing administration.
What initiates the conversion process from Sale to Service?
The conversion process is initiated when the signed letter of intent or engagement letter is received by the successor provider’s representative.
What initiates the conversion process?
The letter of intent, or an engagement letter, initiates the conversion process.
What happens when the signed letter of intent is received?
It is forwarded to the implementation team manager with available information from the proposal stage.
Who is assigned to review the information received from the letter of intent?
An implementation specialist is assigned to review the information.
What services may the provider offer during the conversion?
The provider may offer administrative services such as ADP/ACP testing, discrimination testing, and Form 5500 preparation.
What must the plan sponsor do when preparing a contract?
The plan sponsor must designate an officer to execute the contract.
What is the primary responsibility of the plan sponsor during conversion?
The plan sponsor retains responsibility for numerous aspects of the plan conversion.
What must the plan sponsor communicate to the successor provider?
The plan sponsor must convey information from the prior provider, including contract provisions determining the blackout period.
What role does the prior provider play in the conversion process?
The prior provider holds responsibility for the timing of the liquidation of plan assets.
What is the successor provider’s responsibility during the conversion?
The successor provider must ensure the plan is correctly established and administered.
What is a ‘quarterback’ in the context of plan conversion?
A quarterback coordinates and oversees all activities to ensure all parties meet their commitments.
What decisions must the employer make regarding plan investments?
The employer must decide what investments will be offered and whether participants can direct their investments.
