So, What Is an Automatic Rollover
An automatic rollover works to remove low balance participants that are no longer a part of a company from a savings plan election system. Typically, this dollar range are ex-employees that have invested less than $5000 into their plan.Automatic rollovers are usually referred to safe harbor IRAs as being the same thing, but automatic rollovers are generally referring to the process of forcing participants out. A safe harborIRA generally refers to the entity or instrument that is used to carry out this process.
What to Keep in Mind
When it comes to the function of an auto rollover, one must keep in mind that the system will not affect any current employees, or any former employees that had invested more than $5000 into their plan. In addition, not every plan will always clear out these small old accounts automatically. A plan that destroys all small accounts at the same time, a company will usually see administrative burdens like increased costs. To avoid this a company can elect to periodically remove smaller accounts so that the burden is not so heavy and will help a company to avoid taking unneeded burdens. Third party providers like PlanNotice can work to make sure that your lists are all cleared periodically, so that you do not face mass price increases from clearing your rosters all at once.
How Does an Automatic Rollover Work?
The system works by following coding that is put into the system by the operator.Typically, a company will use an outsourced provider like Plan Notice. These providers will clear your roster of any former employees who invested less than$5000 into their accounts. Plan Notice will follow the provisions that are provided and check over the roster periodically to remove any unneeded employees from your lists. A plan will check the rosters every so often and send an alert to the system operator if it finds an employee who no longer fits the system criteria. At this point the system operator will send a notice to the former employee and alert them of the steps they need to take over their situation. If they do not act on their account, it will be converted into a safe harbor IRA account, leaving the original system.
How Plan Notice Can Help Your Company
By taking care of any of your list clearing needs, Plan Notice will make sure that your retirement plan accounts are accurate and up to date. Plan Notice will make sure that your rosters are kept clean and organized, ensuring that you will not spend valuable time worrying about your retirement plans. Using an auto rollover system like the one Plan Notice provides will help to make sure that your company is running at its best efficiency and not wasting time and resources on outdated employee benefit rosters. Converting small and old accounts into safe harbor accounts will clear them out of your system and keep it running smoothly. In addition, a safe harbor account will allow for an employee to take control of their account, freeing your space. Contact PlanNotice today if you think your company would benefit from an auto rollover system.
