The Experts do not believe the new IRS prototype program will be a significant factor with respect to the vendor consolidation trend for one important reason; in their current proprietary plan documents, certain vendors have been willing and able to accommodate multiple recordkeepers. Since there were no features of the prototype program that would effectively prevent vendors from including other recordkeeper provisions in their written plans, one would believe they will continue to allow for “outside” vendors in their new prototype plan documents.
Thus, though many plan sponsors may reconsider certain features of their plan in order to conform to a vendor prototype document, the use of multiple recordkeepers will likely not be one of those features. Having said that, the more vendors one has, the more difficult it may become to draft a document for which operational compliance by all providers can be assured.
In addition, there may be other reasons a plan sponsor may wish to consider reducing the number of vendors it utilizes that have nothing to do with the plan document. These factors include improving purchasing power of plan assets, reducing administration, and facilitating communication of the benefit.
The Experts want to thank all of those who attended our session at the PLANSPONSOR National Conference. Your thoughtful and interesting questions were key to making the workshop a success!
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.