What to expect when your retirement plan is transitioning to a new provider

Your employer may periodically evaluate your retirement plan and looks for ways to improve upon it. Sometimes helping you become better prepared to reach your goals means transitioning the plan to a new provider.

During a retirement plan’s transition, there is typically a short period during which your account may be frozen. This is called a “blackout period.” During this time your accounts and contributions will remain invested, but withdrawals and loan requests are not available. You also won’t be able to change your contributions or investments.

During the blackout period, all plan assets are typically  transferred from the prior service provider to the new plan provider. There are a couple different ways this transfer commonly happens. In one situation, participants’ account assets are mapped over to similar investment options offered by the new plan provider. Alternatively, the plan sponsor may transfer the accounts to a default investment option (or options). After the transition, participants have the opportunity to choose their own investment options.

Transitioning to a new retirement plan provider is intended to improve the benefit for those who participate. No matter what method is used to transition the plan over to the new provider, plan participants should not lose anything from their accounts, and the process should be fairly seamless. The new provider will provide communication materials throughout the process to keep you updated on what is happening with your account.