Transfer In-Kind

• If your company's new retirement plan service provider maintains the capability to offer the exact same investment options as those previously available, employee accounts will likely be transferred with no allocation changes and with no need for complex reeducation or reallocation. Moving a retirement account without changing the current investment portfolio composition is called a transfer in-kind, which can only be accomplished if the plan offered by the new provider contains the same investment choices.
  
  

Comparable Replacement

• Sometimes when a company-sponsored retirement plan changes hands, the new service provider doesn't offer the exact same investment options that the previous provider did. In such cases, employee accounts may be reallocated into a portfolio of comparable investments that's as close as possible to the old version, using the new provider's available choices.
  
  

Transfer as Cash

• When a retirement plan moves to another service provider that doesn't maintain a host of investment options that are identical, or even similar, to those that were previously available, employee investments may be liquidated during the transfer. In such cases, the total value of each account gets transferred as a cash balance and must be reallocated within the new provider's available investment options.
  
  

Tax Ramifications

• When an employer decides to switch retirement plan service providers, any alterations, changes, reallocations or liquidation of investment positions within employee accounts doesn't result in a taxable event. The accumulated value of these retirement investments remains within a properly structured account, and at no time do workers take possession of the money. There should be no fear of penalties, fees or other tax-related consequences as part of the retirement plan changing hands.