Through its new Market Value Stabilizer program, Memphis, Tennessee-based First Mercantile absorbs the expense associated with surrender charges. Those charges are generally put in place to protect plan providers, acting as a disincentive for sponsors to move their funds prior to the maturity date.
When a provider is not performing adequately, either in administrative services to the employer, or in returns on the investments of plan participants, a plan sponsor needs the flexibility to move the plan’s assets to a better provider.
Surrender Charges Credited
Within 10 days following the transfer of a plan’s funds to First Mercantile, the Market Value Stabilizer program credits the retirement plan for the full amount of the surrender charge as an adjustment to the earnings of the plan.
Each participant’s account in the plan is credited proportionately with its share of the surrender charge. To offset the costs, the plan pays First Mercantile an annual fee equal to 0.2% of the total plan assets for the initial earnings adjustment.