When a retirement plan changes TPAs or recordkeepers, everybody wants the conversion completed as quickly and smoothly as possible. Assets have to move, payroll files need to work, participant accounts need to be established, and somebody wants to declare the conversion a success.
The problem is that the most important information may be buried in the conversion notes.
A new provider inherits more than participant balances and demographic data. It can inherit years of bad assumptions. Maybe the prior provider used the wrong definition of compensation. Maybe an employee classification was handled incorrectly. Maybe eligibility was programmed improperly. Maybe somebody identified a problem two years ago but nobody ever confirmed that it was corrected.
Those issues don’t disappear because the plan changed providers.
Too many conversions focus on whether the numbers transferred instead of whether the numbers are right. If bad information goes into the new system, the new provider can simply continue administering the same mistake on a better platform.
That is why conversion notes matter. So do prior testing reports, plan documents, amendments, correction files, payroll procedures, outstanding questions, and communications from the former provider. If something unusual appears in those records, somebody needs to ask why.
The new provider didn’t create the old problem, but once the provider becomes aware of it, ignoring it creates a new problem.
Providers should treat conversions as more than technology projects. They are opportunities to determine whether the way the plan has historically operated actually matches the plan document and applicable law.
Nobody wants to slow down a conversion by asking uncomfortable questions. But asking them during conversion is usually a lot easier than answering them three years later during an audit, correction, or government examination.
Data migration is important. Institutional knowledge is just as important. Read the conversion notes. Sometimes the biggest liability being transferred isn’t sitting in the participant accounts. It’s sitting in an old email explaining something nobody ever fixed.