Five questions to ask when choosing a Taft-Hartley retirement plan recordkeeper

Taft-Hartley DC funds have complexities not often found in other 401(k) plans. Your plan may cover members over a wide geographic area, across many companies and industries, and even from other unions under reciprocity agreements. Helping your membership get the most out of the plan requires that you find a recordkeeper that understands these complexities and takes the time to get to know your goals and your members’ needs. 

Under ERISA, you’re required to follow a prudent evaluation process when you’re choosing service providers. You’ll want to know how service providers will handle your unique circumstances, such as membership demographics, other retirement benefits (e.g., a pension), collective bargaining agreement contribution rates, and your goals for the plan. Asking these five questions will help you fulfill your due diligence duty. 

Question 1—Can you provide flexible member education options?

Your members may not be able to attend a centralized 401(k) or annuity plan education meeting on their lunch break—they may not even work nine to five. And while many of us take computer or smartphone access for granted, that’s a luxury not every member has. Ask potential recordkeepers how they’ll address your members’ unique needs. Can they offer flexible on-site communication and advice meeting times and options? How will they communicate with members who have atypical workday schedules? Your retirement plan provider has to be able to meet members where they are, which requires a combination of in-person and live virtual meetings, as well as education that targets members in their relevant stage—whether they're an apprentice, journeyman, preretiree, or retiree.

Question 2—Can you handle our Taft-Hartley plan’s recordkeeping requirements? 

Reciprocity agreements covering employer DC contributions can play havoc with some recordkeeping and administrative processes and procedures. The nature of union member work, which can include working for multiple employers in multiple jurisdictions, makes recordkeeping even more complicated, with a need to keep track of contributions coming from multiple employers for different work periods. And members need to be able to ensure they’re receiving the contributions they’re owed and/or deferring.  

Failure to properly recordkeep contributions and delays depositing paycheck deductions can lead to penalties and fines—as well as unhappy members. Your recordkeeper should have proven technology for administering contributions under potentially complex collective bargaining agreements, and they should have plan sponsor reporting that enables you to verify proper contribution processing and coding.

Question 3—Do you offer flexibility in your Taft-Hartley plan design?

No two members are alike, and no two plans are exactly alike either. And although ERISA requires that every qualified DC plan offers certain options, you have leeway when it comes to:

• Loans
• Investments
• Automatic features 
• Advice 
• Withdrawal and distribution flexibility
• Contribution types: pretax, Roth, and employer only 

The features you choose should depend on the goals for your plan—for example, how much you expect member balances to contribute to their retirement income. Ask potential recordkeepers how they’ve designed other Taft-Hartley plans and what’s worked for plans with members whose demographics and goals are similar to yours. 

Question 4—How much Taft-Hartley plan experience do your service teams have?

An effective relationship manager understands your goals for your retirement plan and brings relevant experience to helping you make informed decisions—not just DC experience, but Taft-Hartley DC experience. Your relationship manager should know how to work with your fund office staff, appreciate the cyclical nature of hours in certain trades, and be familiar with working within the intricacies of collective bargaining agreements. Ultimately, your relationship management and service team should be experts in Taft-Hartley plans in order to provide you with the support and help that you need. 

Question 5—How many Taft-Hartley plans and members do you support? 

Experience matters. Ask prospective recordkeepers how many Taft-Hartley plans and members they serve, both overall and as a percentage of total clients and participants on their recordkeeping platform. The bigger both numbers are, the more likely a provider possesses the experience and resources required to help structure your plan in a way that meets your goals and helps your members make sound decisions. 

Be prudent and ask questions when selecting a recordkeeper for your Taft-Hartley retirement plan

Choosing a retirement plan recordkeeper is similar to hiring a contractor: You have to solicit bids, evaluate a candidate’s body of work, and, ultimately, pick the organization that’s best equipped to get the job done. In both cases, the costs of correcting a mistake once a project is under way are high—expertise and focus count. Make sure you ask these five questions—and, of course, others that reflect your union’s specific needs—to help you choose the right partner for your organization and fulfill your duty as an ERISA fiduciary.