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How to Change Your 401(k) Provider

Small businesses need a competitive benefits package to recruit top talent, including the best possible 401(k) your company can offer. So you put one in place. But after a few years, you’ve realized it may not be the right plan.

Maybe it’s the high fees, the lack of support and customer service, or poor financial performance that is making you re-evaluate your choice of a 401(k) provider. If you’re considering making a change, here are some tips that will help you evaluate your current provider and put a new plan in place if you decide to switch providers.

Evaluate Your Current 401(k) Provider

Step one is to consider the pros and cons of your current provider. Evaluate and rate them based on:


Are recordkeeping, administration, and management fees reasonable when compared to other providers of a similar size? Understanding a provider’s fees is an area where it’s worth your time to dig into the details. As the former chairman of the Securities Exchange Commission said, “Perhaps no other issue…has as much direct impact on investors’ returns than the level of fund fees. While fund performance is unpredictable, the impact of fees is not.” To help you analyze this further, check out, Is Your Company’s 401(k) Too Expensive?

Related article: How much does a 401(k) plan cost employers?  |  See our pricing.


When it comes to investments, especially those for retirement, financial advisors focus on the long-term. Bad years happen. But that doesn’t let your provider off the hook. When you’re examining if they are the right fit for your business, be sure you know what their investment strategy is. For example, the team at Human Interest has an investment philosophy that uses the expense ratio as a predictor of performance, as well as the long-term expected returns.

The level of service for employees

Is the provider responsive? Do they have a reliable level of expertise? Are plan participants able to get the account help they need? Advice about their investments? Are their online tools easy to use and accessible? This is usually directly correlated to employee participation rates. You don’t want to pay for something that your employees don’t even want to use.

The level of service for administrators

How much administrative work and time are going into managing your company’s 401(k)?  Is the provider proactive and communicative? Do they provide support for compliance issues? Can you trust the accuracy of their data and punctuality around deadlines and pay periods?


Are your needs being met when it comes to IRS reporting, distribution reporting, and non-discrimination testing? Did they explain that you need an ERISA bond? Form 5500s? Is the provider in good standing with regulatory agencies? Are they a fiduciary?

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Planning Ahead to Switch 401(k) Providers

Larger companies with over 100 employees

If you determine that your current provider isn’t meeting your needs, send out a Request for Proposal (RFP) to other providers. This Sample RFP for a 401(k) Provider from 401K Help Center is a good place to start. The idea behind the RFP is to gather as much information as possible from interested providers. You’ll use this information to answer important questions around:

    • Fiduciary Responsibilities
    • Investments
    • Service
    • Participant Access
    • Cyber Security
    • Fees

Once you have your proposals, select the top providers, and meet with them. Talk to the people in sales, but also request a meeting with the implementation specialist or account consultant. These are the people who will have firsthand knowledge and experience about how their product will or won’t work for your business’ needs.

Smaller companies with fewer than 100 employees

Smaller companies may not need a formal RFP process to find the best 401(k) plan. But be sure that your process still involves interviewing at least three or four providers. During demos, sales meetings, and conversations with the potential providers, be sure that you’re covering the points above to gather all the information you need to make an informed decision.

While it can take some time to find new providers and then review what their plan offers, it’s important to take the process seriously—you have a fiduciary responsibility to your plan participants, and skipping steps can cause serious problems later.  

The Implementation Process: Employee Notices, Switching, the Holding Window, Plan Launch, etc.

Once you determine your new provider, it will take some behind-the-scenes administration as well as a holding window to facilitate and implement the switch to a new 401(k) plan. Both providers will, no doubt, have participated in a 401(k) plan switch before and can help you through the process. At a minimum, you can expect the following:

  • A review of the previous plan from your new provider
  • Preparation and testing to confirm data transfer between providers (e.g., participant plan balances, loan information)
  • Communication to employees about the who, what, when, and why of the new plan
  • Updates to legal and recordkeeping documents indicating the new investment provider
  • A holding window while the former provider runs final participant data
  • Issuance of  final statements from former 401(k) provider
  • Creation and activation of  new participant accounts

A note about holding windows: be sure to ask the former and new provider for an estimated length of time that participants won’t have access to their 401(k) plan. The length of time will depend on the number of participants, the investment funds, and the provider’s process. But keep in mind that during the holding window participants won’t be able to make new investments, request loans, or withdraw funds, so you’ll want to limit the amount of time the holding window takes as much as possible.

It takes some time and effort to review your current plan and then go about changing it. But if you’re not happy with your 401(k) provider, there’s no reason to suffer. Now, more than ever before, small and medium-size businesses have a variety of options when it comes to online 401(k) providers. As you go about this process, take hope in the fact that there are a variety of providers who offer innovative, affordable, and scalable options that enable you to meet your business needs and the needs of your employees.

Liz Sheffield has more than a decade of experience working in HR. Her areas of expertise are in training and development, leadership development, ethics, and compliance.


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The content in this blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Human Interest's investment advisory services are provided by Human Interest Advisors, LLC, an SEC-Registered Investment Adviser. Investing involves risk and may result in loss. Past performance is no guarantee of future results, and expected returns may not reflect actual future performance.