Certified Plan Sponsor Professional (CPSP) Practice Exam

What should be a consideration when changing recordkeepers?

1. The number of employees affected

2. The communication to plan participants

3. The number of plans offered

4. The historical performance of the old recordkeeper

The correct answer is: The communication to plan participants

When changing recordkeepers, effective communication to plan participants is crucial because it helps ensure a smooth transition and minimizes confusion or anxiety among the employees affected by the change. Clear communication provides participants with information about what to expect, including any changes in how they will access their accounts, the services being offered, and timelines for the transition process. Proper communication can help to mitigate misunderstandings and maintain trust in the plan, as participants are more likely to feel assured when they are informed and understand the reasons behind the change. This is particularly vital because changes in recordkeeping can impact how participants manage their retirement accounts, access information, and receive support. Effective communication strategies may include informative sessions, detailed written correspondence outlining changes, and channels for participants to ask questions or express concerns. In considering the other options, while factors like the number of employees affected, the number of plans offered, and the historical performance of the old recordkeeper are all important, they do not directly address the immediate need to engage with participants during a time of change. The success of the transition largely depends on how well participants understand and adapt to the new recordkeeping structure, making communication the most critical aspect.