The Employee Education Solution and the Employee Advice Solution are excellent benefits while your employees are active employees. However, change happens (e.g., employees come and go, retire or you may have to make strategic changes to your business that result in unforeseen transitions). This can be a stressful time for your employees, and they may desire counseling to help them assess their options so that they can make informed financial decisions. Worksite Financial Solutions is your partner to help employees in their time of need. The following programs are included in our transition support services:
Terminated Employee Transition Financial Education
When employees separate from service, they have a variety of decisions to make that could have significant consequences if they are not counseled on the pros and cons of their decisions. For example, what should they do with assets in their retirement plan? Should they keep them in your plan? Should they take the money and spend it? Should they roll the money into an IRA? An objective discussion may help employees understand their options and consider consequences before taking action. (Note: The Employee Transition Solution is not available to employees enrolled in the Employee Advice Solution.) For employees transitioning out of your plan, we work together with your advisor to ensure that the counsel delivered is unbiased and aligned with each employee’s objectives. Essentially, we help your employees understand their options and implement any decision they make.
New Employee Transition Financial Education
When new employees bring their retirement accounts from past employers, the Employee Engagement Solution helps make it easy for them—and for you—to integrate their accounts into your plan. The Employee Engagement Solution enables LPL Financial to help active participants roll over their qualified plan assets held at their former employer into their current retirement plan, so they can remain in control of their retirement savings.
Life-transition events, such as changing employment, can leave loose ends. The retirement plan account shouldn’t be one of them, yet for employees, moving the account from the old to the new employer may seem confusing and intimidating. With the Employee Engagement Solution, you potentially improve the chances that your employees will reach their financial goals. They receive the education, guidance and transaction support they need, using in-person or online help from a registered financial advisor.
We will deliver a customized program, tailored to your unique organization and employees. It will add value to your benefits program, without adding costs to the plan. Because employees are better informed about their retirement plan options, they may be more likely to roll their old plan balance into your plan.
What could that potentially mean to you?
- Increased plan enrollment
- Higher average deferral rates
- An increase in plan assets
Once new employees are enrolled in your retirement plan, our Retirement Results Team will work with your advisor to welcome them into your company and help them understand the options associated with the plan. Even if they are automatically enrolled in your Qualified Default Investment Alternative (QDIA), they still may benefit from a discussion of their options in the plan beyond the default investment option, and a consolidation discussion if they have old retirement plans.
Terminated Employee Transition Solution
The termination of employees is difficult for all parties involved. The Employee Transition Solution can help make the process less stressful, giving former employees the tools and advice they need to move forward. An involuntary job change is one of life’s most stressful events. Former employees may struggle to make good decisions about managing their resources during the transition:
- About 40%1 of terminated employees cash out their retirement accounts
- Resulting in current income and penalty taxes from premature distributions, and
- Threatening their future retirement income.
They need help. And when they don’t get the support they need from you, they often turn to coworkers to vent their frustrations. This may lead to poor morale among employees who remain. The Employee Transition Solution helps you provide support for former employees during a tough time in their lives. They have access to a registered financial advisor, who can help them learn about their options for their retirement plan accounts.
- Keep their money invested
- Maintain their asset allocation strategy
- Transfer their accounts into a new employer’s plan or an IRA where appropriate
The service helps maximize your resources, addressing plan sponsor issues like:
- Reducing administration and record keeping for terminated accounts, and the costs of those services
- Simplifying processes for maintaining contact with former participants
- Managing fiduciary responsibilities associated with “lost” participants
Using a streamlined outreach process, we endeavor to reach 100% of your terminated participants. Small accounts (less than $5,000) are automatically transferred into a safe harbor IRA consistent with DOL regulations. All activity is documented, and you receive reports detailing:
- Participant outreach efforts
- Missing participant searches
- Disposition of participant assets
When you implement The Employee Transition Solution, you help former employees understand their options and keep their retirement on track, while reducing plan costs for current participants. The rollover process is streamlined and efficient, and fiduciary liability associated with former employee accounts is reduced, all at no cost to the plan sponsor.
1 AON Hewitt, Leakage of Participants’ DC Assets: How Loans, Withdrawals and Cash outs are Eroding Retirement Income, 2011