Plan Sponsors Utilize Rollover Services and Products

When communicating with retiring employees to review their retirement benefits, half of plan sponsors surveyed use a one-on-one meeting with a financial professional.

In its report, “Opportunities in the Rollover Market Plan Sponsor Perspective,” LIMRA said 68% of sponsors expressed no preference about what retirees do with their plan balances, and 65% of sponsors said they had no preference for what participants who terminate for other reasons do with their plan assets. Over half (56%) of the surveyed sponsors said someone meets with retiring employees to review their retirement benefits, and nearly half (49%) indicated someone meets with employees who leave for other reasons. Meetings are significantly more likely to occur at businesses with at least 100 employees.

Plan provider or recordkeeper representatives are far more likely to meet with retirees than with non-retirees, the report said. Businesses with at least 500 full-time employees are considerably more apt than smaller businesses to have company representatives handle these meetings.

The most common method respondent sponsors use to communicate about benefits with retirees is a one-on-one meeting with a financial professional (49%), followed by a toll-free call center (45%), written materials (42%), and a Web site (35%). For participants who terminate for other reasons, sponsors communicate via written materials (38%), a one-on-one meeting with a financial professional (37%), a toll-free call center (37%), and a Web site (26%).

Rollover Products and Services

Although most plan sponsors have no preference what terminating participants do with their plan money, when recordkeepers offer services and products for participants that take distributions, plan sponsors are likely to use them; 85% of the 800 defined contribution plan sponsors surveyed whose recordkeeper offers distribution services indicated they use these services.

As part of their asset retention efforts, LIMRA found nearly 8 in 10 plan providers or recordkeepers offer rollover IRA products and services. Among sponsors with providers that offer them, nearly 9 in 10 use these products or services for their employees who retire or terminate employment for other reasons.

According to the report, newer businesses (those in business less than 10 years) or businesses with higher-paid employees are somewhat more likely to use IRA rollover products/services offered by their plan providers or recordkeepers. However, there is a high likelihood of use across different business types.

Although most plan sponsors expressed no preference about what participants do with their plan assets once they terminate or retire, preferences varied by size of employer. LIMRA said the largest businesses are much more likely to express preferences, and to prefer that retirees remain in the plan, probably because by having more participants defer their balances – particularly those with higher balances – larger employers can enjoy greater advantages in fee negotiations with plan providers.

Most sponsors preferred smaller balances (less than $5,000) leave the plan, but 46% reported they leave the small balances in the plan. Only 16% said they take advantage of the fact they can legally automatically roll balances between $1,000 and $5,000 into an IRA.

Although most plan sponsors utilize rollover product and service offerings, LIMRA found the same was not true for annuity product and service offerings. Forty-seven percent of sponsors said a retiree requesting an annuity payout must take plan assets in a lump-sum and purchase the annuity on their own.

One quarter of sponsors said annuity payouts are purchased with the same trust/contract of the financial institution that holds plan assets, and only 11% said they direct the transfer of the retirees’ assets to a product of the financial institution that holds the plan assets.

Copies of the LIMRA report can be obtained by visiting or by contacting LIMRA’s InfoCenter at