RPF M6 U2 Completing the Conversion Process Flashcards
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What is the blackout period?
During the blackout period, participants have limited or suspended ability to obtain loans or distributions or make changes to their investments.
What is a Blackout Notice?
A Blackout Notice communicates to plan participants the restrictions in effect during the blackout period and the length of the blackout period. It is required if a blackout period is expected to last longer than three days.
The notice must be provided not less than 30 days or more than 60 days before the start of the blackout period.
What happens during the liquidation of assets?
The prior provider performs a final valuation of the assets and ‘sells’ them to transfer cash to the successor provider.
What must happen before the blackout period can be initiated?
All pending transactions must be finalized before the blackout period can be initiated.
What is required of the successor provider during the transfer of data?
The successor provider must prepare their computer system for participant accounts and ideally receive a digital file for each participant’s account from the prior provider.
What is an Interim Investment Account?
The successor provider may hold the funds in an interim account until the prior provider provides an accurate accounting of those funds.
What occurs after the cash is transferred to the successor provider?
The cash must be allocated among the participants based on the participant accounts at the prior provider when the assets were liquidated.
What is required for the reconciliation of data?
Once both the assets and the final accounting report of participant account balances have been received, they must be reconciled.
What happens at the end of the blackout period?
Once a correctly reconciled report is received, any pending participant transactions can be completed, and participants are notified that they can access their account information.
What notifications must be provided related to the conversion?
Participants must receive a series of notifications explaining the conversion process, including how their funds are being held in two different companies until liquidation.
What is the purpose of the Safe Harbor Notice?
A Safe Harbor Notice is provided to participants when the plan sponsor decides to provide a safe harbor contribution, allowing the plan to avoid ADP/ACP nondiscrimination testing.
The notice must be given not more than 90 or less than 30 days prior to the beginning of the plan year.
What is the Summary Plan Description (SPD)?
Whenever a plan is restated, an SPD must be prepared with the new provisions and distributed to all participants within 120 days after the restatement is adopted.
How can employee meetings be used effectively?
Employee meetings can announce the conversion of the plan, explain new provisions, and obtain participant elections.
What signifies the end of the new business implementation team’s involvement?
The end of the blackout period signifies the end of the new business implementation team’s involvement with the plan.
What should be communicated to the plan sponsor during the conversion?
The status of all information requests, missing data, and imminent reports, along with the contacts at the plan sponsor.
Why is it important to establish clear responsibilities during the conversion?
To ensure that ongoing administrative tasks are handled properly after the conversion.
Who typically continues to process deferrals, contributions, and loan payments after a conversion?
The same plan sponsor team, unless responsibilities are shifted among departments.
What should be done if the plan sponsor is shifting responsibilities?
Train key personnel such as the CFO, CEO, or head of HR on new procedures.
What should the successor provider reassure smaller plan sponsors about?
That their manner of performing duties will be respected and their contributions are valuable.
What is a potential issue with a reticent payroll clerk during a conversion?
They can make the conversion process very bumpy.
What must the successor provider ensure regarding data files?
That the payroll provider can produce data files in the new format when deposits begin.
What types of forms are needed for new and terminated participants?
Forms for new participants entering the plan and for newly terminated participants requesting distributions.
How can participants make changes to their marital status and beneficiary?
Some providers allow online changes, while others require a paper record.
What ongoing data must be provided to the successor service provider?
Employee status changes that impact participation, deferral, and compensation information.
