company wants to change retirement providers

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

company wants to change retirement providers

Post by finfire »

My company wants to change our retirement services from Voya to adp. We have a trad 401k and roth 401k.

As part of this, they plan to "map" our old funds to new funds.

I have been ok with Voya...we have excellent fund options ...many are low cost Vanguard index funds.

Can I stop my company from mapping my funds over? Can they really divest me from current funds to other options? What can I do if the new investment options are terrible?

I have seen that adp are pretty poor. Anybody have any positive or negative experiences with adp retirement?

I have floated the idea of them moving my existing funds in an in-kind transfer to vanguard before the change but have not heard back...

Appreciate any help.
alex_686
Posts: 13406
Joined: Mon Feb 09, 2015 1:39 pm

Re: company wants to change retirement providers

Post by alex_686 »

No, there isn’t much you can do.

If they are terminating the old plan you can do a direct roll-over of your current vested monetary balance into a personal IRA / Roth.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
sailaway
Posts: 8331
Joined: Fri May 12, 2017 1:11 pm

Re: company wants to change retirement providers

Post by sailaway »

Have the given you the option to roll the funds to an IRA?

You can't stay with the Voya 401k because it will cease to exist.
madbrain
Posts: 7476
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: company wants to change retirement providers

Post by madbrain »

Some Roth 401k plans allow in-service rollovers to Roth IRA. Check if your plan does.
HomeStretch
Posts: 11618
Joined: Thu Dec 27, 2018 2:06 pm

Re: company wants to change retirement providers

Post by HomeStretch »

Spouse has a 401k with ADP sponsored by a former mega-Corp employer. The plan offers good low-ER fund choices. But your plan may or may not be low-cost as it’s up to your employer (the sponsor) to decide whether the company or the participants will pay the plan fees.

The plan sponsor (your employer) will legally need to send notices to all participants regarding the upcoming lan change including the new plan funds/ERs, how your existing funds will be mapped to the new funds, blackout period, etc.

The plan change might turn out to be good. But unless you are able to take an in-service distribution prior to the start of the blackout period, you cannot stop your plan balance from being transferred. If you don’t like the new funds, you can change without tax consequences once the blackout period ends.
ccieemeritus
Posts: 731
Joined: Thu Mar 06, 2014 9:43 pm

Re: company wants to change retirement providers

Post by ccieemeritus »

It may be early enough to encourage your financial department to include a low-ER s&p500 index fund in the fund choices. For companies with periodic “all hands” meetings this is the perfect kind of question to ask (it affects all employees and is “solvable”)
User avatar
Watty
Posts: 28996
Joined: Wed Oct 10, 2007 3:55 pm

Re: company wants to change retirement providers

Post by Watty »

I once had a company change the 401k plan from Fidelity to a large insurance company.

There was a list of the new choices but were not a lot of details at first so I looked at the insurance companies web site and even the index funds had terrible expense ratios when you googled them.

When the details finally came out there were several dozen junky mutual funds but buried in the list the 401k had several lost cost index funds with ER of about 0.1% which was really good and I was able to set up a good three fund portfolio.

These technically were not mutual funds though, they were something like a "shared account" which did not have a detailed prospectus so you could not get a lot of details for since all they had was a one or two page fact sheet about the shared account fund. For the index funds that was not a big deal but for the other couple of dozen junky funds it pretty vague just what they were actually doing with the investment.
User avatar
Nate79
Posts: 9396
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: company wants to change retirement providers

Post by Nate79 »

Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
LagottoR
Posts: 5
Joined: Tue Feb 09, 2021 8:31 pm

Re: company wants to change retirement providers

Post by LagottoR »

I am on the 401K committee of our company and experienced something similar just recently as we went from Prudential to Empower as plan provider (i.e., Empower acquired Prudential). We used the opportunity to remap from previous funds to new low expense Target Date Funds (Vanguard) for all participants. (TDF's are best practice in 401K like plans according to the surveys we were shown.)

Whoever oversees the 401K plan in your company as plan sponsor is legally responsible and has a fiduciary duty that the plan is in the best interest of the participants; this includes fund selection, cost, no conflict of interest, etc. You can always ask them what their plans are and remind them about their fiduciary duty :-).
shepherd
Posts: 85
Joined: Sun Aug 28, 2011 7:46 pm

Re: company wants to change retirement providers

Post by shepherd »

My company uses ADP 401k services. They have been very good. Last time we benchmarked recordkeeping fees they were just slightly above Vanguard. The positive is that ADP doesn't offer it's own mutual funds so there is no conflict of interest and your company should be able to offer a competitive slate of index funds from Vanguard, etc. While you mentioned this wasn't your experience, in the past Voya offered their own funds which were not that great. You might ask your company whether they have a zero revenue model in place. In this model participants pay a fixed fee each quarter as opposed to a percentage of their assets for the service. This is preferred when your balances are large. It also eliminates any conflict of interests caused by a revenue sharing model.
exodusNH
Posts: 10535
Joined: Wed Jan 06, 2021 7:21 pm

Re: company wants to change retirement providers

Post by exodusNH »

finfire wrote: Tue Apr 02, 2024 7:19 pm My company wants to change our retirement services from Voya to adp. We have a trad 401k and roth 401k.

As part of this, they plan to "map" our old funds to new funds.

I have been ok with Voya...we have excellent fund options ...many are low cost Vanguard index funds.

Can I stop my company from mapping my funds over? Can they really divest me from current funds to other options? What can I do if the new investment options are terrible?

I have seen that adp are pretty poor. Anybody have any positive or negative experiences with adp retirement?

I have floated the idea of them moving my existing funds in an in-kind transfer to vanguard before the change but have not heard back...

Appreciate any help.
Yes, they can do this. The funds are in a trust they administer.

It might not be bad. E.g., American Funds runs our 401k, but we have Fidelity index funds to choose from.

I don't think you'll be able to roll your holdings into an IRA.

Mapping simply matches your current holdings to the new holdings. E.g., you might go from VTSAX to FXAIX. You can always go and change it after the transition is complete and the blackout period ends.

The only hiccup might be a stable value fund. Depending on how the losing company is feeling and the contract, they could hold those funds for a year, do a market-value adjustment (MVA), or let it transfer over.

If you were going to make one change before the move, I would move funds out of the SVF if you can be assured of a smooth transition.
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

Re: company wants to change retirement providers

Post by finfire »

Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

Re: company wants to change retirement providers

Post by finfire »

exodusNH wrote: Tue Apr 02, 2024 9:50 pm
finfire wrote: Tue Apr 02, 2024 7:19 pm My company wants to change our retirement services from Voya to adp. We have a trad 401k and roth 401k.

As part of this, they plan to "map" our old funds to new funds.

I have been ok with Voya...we have excellent fund options ...many are low cost Vanguard index funds.

Can I stop my company from mapping my funds over? Can they really divest me from current funds to other options? What can I do if the new investment options are terrible?

I have seen that adp are pretty poor. Anybody have any positive or negative experiences with adp retirement?

I have floated the idea of them moving my existing funds in an in-kind transfer to vanguard before the change but have not heard back...

Appreciate any help.
Yes, they can do this. The funds are in a trust they administer.

It might not be bad. E.g., American Funds runs our 401k, but we have Fidelity index funds to choose from.

I don't think you'll be able to roll your holdings into an IRA.

Mapping simply matches your current holdings to the new holdings. E.g., you might go from VTSAX to FXAIX. You can always go and change it after the transition is complete and the blackout period ends.

The only hiccup might be a stable value fund. Depending on how the losing company is feeling and the contract, they could hold those funds for a year, do a market-value adjustment (MVA), or let it transfer over.

If you were going to make one change before the move, I would move funds out of the SVF if you can be assured of a smooth transition.
why do you think they won't allow rolling into an IRA?
stan1
Posts: 14346
Joined: Mon Oct 08, 2007 4:35 pm

Re: company wants to change retirement providers

Post by stan1 »

finfire wrote: Wed Apr 03, 2024 7:53 am
Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
Wait until you get the facts to worry about this. You are causing yourself stress for something that may not be an issue. You are assuming the new plan will not have index fund investments which I think is a very faulty assumption.
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

Re: company wants to change retirement providers

Post by finfire »

stan1 wrote: Wed Apr 03, 2024 8:23 am
finfire wrote: Wed Apr 03, 2024 7:53 am
Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
Wait until you get the facts to worry about this. You are causing yourself stress for something that may not be an issue. You are assuming the new plan will not have index fund investments which I think is a very faulty assumption.
I agree with you mostly and will update the post when I have concrete facts. My stress is due to the morons that bought our company a couple of years ago. It was a decent small company with good benefits. Now the benefits are horrible, the owner is MIA, they are ruining our reputation at our clients while clawing every cent for themselves...I am attempting to move but its not easy....
dorster
Posts: 316
Joined: Tue Aug 15, 2017 4:20 pm

Re: company wants to change retirement providers

Post by dorster »

finfire wrote: Wed Apr 03, 2024 7:53 am But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
What's being pointed out is that it doesn't matter what funds they map you to. You can always change them after the blackout period. You keep repeating the concern about mapping you to funds, not of your choosing which makes it seem like you don't understand how 401Ks work.

What you are right about is that you don't yet know what your new 401K fund options will be--and they could be good or bad. This is something that could potentially affect you.

I agree that its not worth worrying about yet. I'd also keep in mind that most plans people post on this forum actually have the necessary 2-3 funds needed to create a good portfolio. So there's a good chance you'll be fine.

Regarding rolling to an IRA--most (not all) workplace plans require a "separation of service" (meaning you need to no longer work there) to roll over to an IRA.

Best of luck!
the_wiki
Posts: 3032
Joined: Thu Jul 28, 2022 11:14 am

Re: company wants to change retirement providers

Post by the_wiki »

finfire wrote: Wed Apr 03, 2024 7:53 am
Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
The company is not legally required to provide you with any benefits at all, much less good ones. So yes, they can decide to offer a worse 401k plan and there is nothing you can do about it other than quit.
HomeStretch
Posts: 11618
Joined: Thu Dec 27, 2018 2:06 pm

Re: company wants to change retirement providers

Post by HomeStretch »

finfire wrote: Wed Apr 03, 2024 7:53 am But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
Did you receive the required legal notices from the plan sponsor regarding the change in providers and the mapping/ERs? If not, consider not stressing over it.

Do you know with certainty that the new plan is worse? Will you be significantly worse off? If yes, some options are:
1) raise your objections with management
2) leave your employer so you can rollover your 401k
3) talk to a benefits attorney about legal action
Jack FFR1846
Posts: 18589
Joined: Tue Dec 31, 2013 6:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: company wants to change retirement providers

Post by Jack FFR1846 »

I would recommend you ask everyone about doing an in service rollover. When someone says no, move on to someone above them or to the next entity. Do this with the current 401k provider, the new 401k provider, HR and anyone directly involved with choosing the 401k provider. I was with a company moving from one garbage provider to another garbage provider. If I were 59 1/2 (I wasn't), I could do an in service rollover once a year. If not, everyone said no on rolling over. As the first 401k provider was garbage and I remember doing a sort by ER with the lowest being 0.41%, I considered it to simply be a place to build money that would go into my IRA when I quit. Sometimes, that's what you need to do. Or go without and just put money into your Roth if your income allows or do a backdoor Roth. I'll add that that garbage 401k also had zero match. Now, retired, I regret doing so much tIRA as I'm now doing some scrambling to convert as much as possible before RMDs hit. I do wish I had started doing Roths earlier.
Bogle: Smart Beta is stupid
Colorado14
Posts: 1805
Joined: Thu Apr 07, 2011 4:58 pm
Location: Colorado

Re: company wants to change retirement providers

Post by Colorado14 »

Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.

This is 100% correct. You can invest your funds with the new provider however you would like after the blackout period.
PeaceLily
Posts: 17
Joined: Tue Jan 03, 2023 10:38 am
Location: Delaware River Basin

Re: company wants to change retirement providers

Post by PeaceLily »

I have had a positive experience since my company changed to ADP Retirement.
"Believe me, the reward is not so great without the struggle" Wilma Rudolph
wander
Posts: 4458
Joined: Sat Oct 04, 2008 9:10 am

Re: company wants to change retirement providers

Post by wander »

My spouse's employer has switched 401k custodians several times. Employees have no voice on this subject. But, it is no big deal. We could manage the changes.
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

Re: company wants to change retirement providers

Post by finfire »

PeaceLily wrote: Wed Apr 03, 2024 10:27 am I have had a positive experience since my company changed to ADP Retirement.
Good to know. I hope likewise for me.
User avatar
Duckie
Posts: 9797
Joined: Thu Mar 08, 2007 1:55 pm

Re: company wants to change retirement providers

Post by Duckie »

PeaceLily wrote: Wed Apr 03, 2024 10:27 am I have had a positive experience since my company changed to ADP Retirement.
The problem is that ADP Retirement does not choose the funds, the employer does. If the employer is a penny-pinching Scrooge the employee is out of luck.
exodusNH
Posts: 10535
Joined: Wed Jan 06, 2021 7:21 pm

Re: company wants to change retirement providers

Post by exodusNH »

finfire wrote: Wed Apr 03, 2024 7:54 am why do you think they won't allow rolling into an IRA?
Because the plan isn't terminating.
exodusNH
Posts: 10535
Joined: Wed Jan 06, 2021 7:21 pm

Re: company wants to change retirement providers

Post by exodusNH »

finfire wrote: Wed Apr 03, 2024 7:53 am
Nate79 wrote: Tue Apr 02, 2024 9:29 pm Just because they map you to new funds doesn't mean you are stuck with those for life. You should be able to change your fund selection once the black out dates are over.
But if the mapped funds are poor and the other choices are as bad, doesn't this mean they have affected me negatvely? say they move me from low cost index to high cost active funds, with no better options...
You could use them for violating their fiduciary responsibilities. That's pretty extreme.

The employment market is still good. You could vote with your feet.
Topic Author
finfire
Posts: 330
Joined: Tue Aug 14, 2018 1:52 pm

Re: company wants to change retirement providers

Post by finfire »

So, I received info on the funds available ii adp.

They are mapping old fund-> new fund as so:

Vanguard 500 Index admiral(.04%) -> State Street Equity 500 Index fund - class K (.10%)
Vanguard Developed markets index admiral (.07%) -> iShares MSCI EAFE International Index - Class K (.04%)
Vanguard Total Bond market Index Admiral (.05%) -> Vanguard Intermediate Term bond Index Admiral (.07%)

Outside of this, they don't really offer index funds.

My biggest concern is the State Street Equity 500 Index fund -> Is this a reasonable equivalent for Vanguard 500 Index ? Unfortunately the ER is much higher.

How about iShares MSCI EAFE International Index as a replacement for Vanguard Developed markets index?

Also, I wasn't sure about going from Vanguard Total Bond to Intermediate Term bond, but Vanguard lists Vanguard Total Bond in the intermediate term category.

Thanks for any help!
Geologist
Posts: 3120
Joined: Fri Jan 02, 2009 6:35 pm

Re: company wants to change retirement providers

Post by Geologist »

finfire wrote: Fri Apr 19, 2024 5:11 pm So, I received info on the funds available ii adp.

They are mapping old fund-> new fund as so:

Vanguard 500 Index admiral(.04%) -> State Street Equity 500 Index fund - class K (.10%)
Vanguard Developed markets index admiral (.07%) -> iShares MSCI EAFE International Index - Class K (.04%)
Vanguard Total Bond market Index Admiral (.05%) -> Vanguard Intermediate Term bond Index Admiral (.07%)

Outside of this, they don't really offer index funds.

My biggest concern is the State Street Equity 500 Index fund -> Is this a reasonable equivalent for Vanguard 500 Index ? Unfortunately the ER is much higher.

How about iShares MSCI EAFE International Index as a replacement for Vanguard Developed markets index?

Also, I wasn't sure about going from Vanguard Total Bond to Intermediate Term bond, but Vanguard lists Vanguard Total Bond in the intermediate term category.

Thanks for any help!
The expense ratio of the State Street Equity 500 fund is not much higher than the Vanguard 500 Index Admiral fund. The difference is 0.06% (or $6/10,000 principal invested per year).

No doubt you can research the exact characteristics of the new funds via Google on the web yourself (even if your employer/new plan administrator hasn't provided or yet provided info on these funds).
User avatar
Duckie
Posts: 9797
Joined: Thu Mar 08, 2007 1:55 pm

Re: company wants to change retirement providers

Post by Duckie »

finfire wrote: Fri Apr 19, 2024 5:11 pm My biggest concern is the State Street Equity 500 Index fund -> Is this a reasonable equivalent for Vanguard 500 Index ?
They are the same thing.
How about iShares MSCI EAFE International Index as a replacement for Vanguard Developed markets index?
EAFE does not have the 5% Canada that Developed has but it is close enough.
Also, I wasn't sure about going from Vanguard Total Bond to Intermediate Term bond, but Vanguard lists Vanguard Total Bond in the intermediate term category.
They are similar. Some people prefer Intermediate Term to Total because Intermediate does not have Mortgage Backed Securities (MBS) and Total does. However, if Total is not available then Intermediate will do just fine.
Joe Public
Posts: 203
Joined: Mon Jul 27, 2020 8:36 pm

Re: company wants to change retirement providers

Post by Joe Public »

finfire wrote: Fri Apr 19, 2024 5:11 pm So, I received info on the funds available ii adp.

They are mapping old fund-> new fund as so:

Vanguard 500 Index admiral(.04%) -> State Street Equity 500 Index fund - class K (.10%)
Vanguard Developed markets index admiral (.07%) -> iShares MSCI EAFE International Index - Class K (.04%)
Vanguard Total Bond market Index Admiral (.05%) -> Vanguard Intermediate Term bond Index Admiral (.07%)

Outside of this, they don't really offer index funds.

My biggest concern is the State Street Equity 500 Index fund -> Is this a reasonable equivalent for Vanguard 500 Index ? Unfortunately the ER is much higher.

How about iShares MSCI EAFE International Index as a replacement for Vanguard Developed markets index?

Also, I wasn't sure about going from Vanguard Total Bond to Intermediate Term bond, but Vanguard lists Vanguard Total Bond in the intermediate term category.

Thanks for any help!
Those look like good options to me. I'm glad they continue to offer some low-cost index funds covering a three-fund portfolio for you to use.
Post Reply