Switching your company’s 401(k) provider is a strategic step that more mid-sized employers are taking to improve plan service and participant outcomes. According to Escalent’s 2024 Retirement Planscape report, the top reasons for plan sponsors changing providers in the past two years include overall service quality (23%), organizational mergers or acquisitions (22%), and company growth (22%). This trend highlights how employers are seeking better support, transparent fees, and improved participant experiences.

For more employer-focused 401(k) resources, visit our 401(k) resources hub.

The Short Answer: What Switching 401(k) Providers Really Involves

It’s a question nearly every HR or Finance leader faces: What does it actually take to change 401(k) providers, and will it disrupt our business?

The real answer is less complex than many expect. The transition to a new 401(k) provider typically spans 60 to 90 days. It requires coordination among key stakeholders: plan sponsor, recordkeeper, third-party administrator, payroll/HRIS owner, and any advisors. You’ll need to prepare and transfer plan data, communicate clearly with employees, and plan for a brief blackout period when account changes aren’t possible.

Under federal law, participants in individual account plans generally must receive a blackout notice at least 30 days, but not more than 60 days, before a blackout period, subject to limited exceptions.

Most transitions, when well managed, run smoothly with minimal disruption to day-to-day business.

For a detailed transition checklist, see our Provider Transition Checklist for HR.

Step 1: Clarify Why You’re Switching (and What Success Means)

Ever wonder why so many employers are reviewing their 401(k) providers now? The reasons often go beyond fees.

Here’s how to pinpoint your triggers:

• Service quality: A recent industry survey found that 23% of sponsors switched providers because of support issues for plan sponsors.

• Organizational change: Mergers, acquisitions, or rapid growth may demand a more scalable solution.

• Fees: Investment and admin costs remain a top consideration.

• Participant engagement: Many employers want better education and communication for employees. Employers are increasingly focusing on strategies that foster sustained participant engagement, from onboarding to ongoing financial wellness education.

• Cybersecurity: With rising data threats, security is now a core concern when evaluating providers.

“Inertia is a powerful force. You see a lot of 401(k) plan providers keep clients just by virtue of their clients not wanting to go through the process of changing.” - Charlie Cote, J.P. Morgan

When comparing top 401(k) providers, consider not just cost but the full employer and participant experience, and see our guide to Top 401(k) Providers for Mid-Sized Employers in 2025.

Triggers for Switching (Support, Pricing, Flexibility, Governance)

Choosing to switch often starts with dissatisfaction in one or more critical areas: support, pricing, plan flexibility, or governance clarity.

Cybersecurity is increasingly a top concern for employers evaluating a change.

Mergers and acquisitions are also increasingly common triggers, requiring reevaluation to make sure benefits remain equitable for all employees.

With the rise of cyber threats, employers want providers who can safeguard sensitive participant data, making this a growing driver for reevaluation.

Outcomes to Measure (Admin Effort, Participant Confusion, Reporting)

Too often, companies focus only on the technical process of switching, not the actual results for their team.

Key takeaway: Reducing administrative burden and participant confusion should be the primary measures of a successful transition.

A well-managed switch means HR and Finance spend less time troubleshooting, and participants understand what’s happening and feel supported.

Leveraging automated tools and improved provider technology can further simplify administrative workflows and enhance support.

For milestones to watch, see our 30/60/90-Day Guide.

Step 2: Assign Owners and Set a Simple Operating Cadence

A smooth 401(k) provider transition depends on clear roles and steady communication.

How to organize your transition team:

1. Assign dedicated leads: HR and Finance should each have a clear project owner. Your provider should assign a dedicated transition manager.

2. Define supporting roles: Payroll/HRIS, IT, and your advisor (if any) should be looped in early.

3. Set a weekly checkpoint: Hold brief meetings to review milestones, outstanding items, and risks.

4. Document everything: Keep a running log of decisions and communications to support compliance. Make sure all participant contact information is current to prevent communication lapses, especially during significant company changes.

Expert tip: Ask your provider if they offer a dedicated transition manager and if they can replicate your current payroll system’s connectivity.

Find more on operating cadence in our 401(k) resources hub.

Step 3: Define Requirements (What You Must Have)

Before you sign with a new provider, nail down your must-haves.

Here’s what to look for:

• Transparent fees: Make sure you understand all employer and participant costs: under ERISA Section 408(b)(2), certain service providers must disclose information about their services and compensation to plan fiduciaries, and 404a-5 mandates detailed participant fee and investment disclosures.

• Plan design flexibility: Safe harbor features, automatic enrollment, or custom vesting schedules are valuable for meeting compliance and boosting participation.

• Support and compliance: Providers should handle compliance testing, filings, and offer participant education.

• Integration: Your vendor must integrate cleanly with payroll/HRIS systems to prevent headaches.

Pro tip: Always review the fee disclosure forms and compliance checklist, because the fee disclosures are required by law and help protect your organization.

For more on understanding plan fees, see 401(k) Plan Fees Explained: How Costs Scale as Your Business Grows.

Step 4: Run Evaluation (Shortlist, Demos, References)

Not all 401(k) providers are created equal, so comparison is essential.

How to evaluate providers:

• Build a shortlist using a demo script with at least 10 must-answer questions about fees, service, investment options, and compliance. Be sure to include questions on cybersecurity protocols and data security practices in your demo script.

• Normalize proposals: Compare apples-to-apples across key features, support, and costs.

• Ask for references from similar-sized employers.

Industry data from 2024 suggests average provider tenure among large and mega plans is trending lower, with more sponsors evaluating and switching providers to meet changing needs.

For more on the evaluation process, see How Mid-Market Employers Evaluate 401(k) Plan Providers.

Step 5: Plan the Migration (Phases, Not Dates)

Migration success relies on careful planning and risk management, not just setting a go-live date.

Phased approach:

1. Data & payroll mapping: Work with both providers to make sure all participant data and assets transfer accurately.

2. Blackout period basics: The Department of Labor requires participants to be notified at least 30 days (but not more than 60 days) before a blackout period, which typically lasts 5–15 business days.

3. Risk register: Identify top risks (data errors, delayed transfers, participant confusion) and assign mitigation owners. Delays in asset transfers can lead to participant losses, so prompt reconciliation and tracking are critical.

For details on blackout planning, see our Blackout Period Checklist for 401(k) Migrations.

Step 6: Employee Communications (What to Say and When)

Communicate early and often to keep participants informed and reduce confusion.

What to cover:

• Announcement: Explain why you’re switching and what to expect.

• Blackout notice: Use the Department of Labor’s model blackout notice template to maintain compliance and clarity. Pre-approved templates help minimize support tickets and make sure every employee gets the information they need.

• Go-live update: Let employees know when the new system is active and how to access accounts.

• FAQ: Prepare responses to expected questions about access, investments, and support.

Blackout notices must include the reason, start/end dates, and affected rights, use the DOL template to stay compliant.

For ready-to-use templates, see Employee Communication Templates for Provider Changes.

Step 7: Go-Live and 30/60/90 Steady-State

Once the migration is complete, your job isn’t over, so monitor the plan and support participants through the first three months.

What to verify:

• Account access and balances are correct for all participants

• Payroll deductions sync correctly with the new provider

Any participant issues or questions are resolved promptly at each 30, 60, and 90-day milestone.

Soliciting participant feedback during this period can surface issues early and inform continuous improvement.

A well-executed transition means participants experience minimal disruption and HR/Finance can focus on long-term plan performance.

For more, review our 30/60/90-Day Guide.

Common Pitfalls (and How to Avoid Them)

It’s tempting to assume the hardest part is picking a provider, but the real risks are in the details.

Watch for:

• Hidden fees: Always review fee disclosures and ask direct questions.

• Data errors: Double-check all records before and after migration.

Participant confusion is another common pitfall, so communicate early and use compliance-approved notices.

Missed compliance steps can create unnecessary risk, so make sure every ERISA notice, especially blackout notifications, is properly handled.

Transitions involving M&A or workforce changes are especially vulnerable to confusion if communication is rushed or contact records are outdated.

Diligence and documentation throughout the process are vital.

For a full pitfall mitigation checklist, see our Provider Transition Checklist for HR.

Ready to Make a Confident Switch?

Switching 401(k) providers doesn’t have to be stressful. With clear goals, careful planning, and the right resources, your transition can improve service quality, support compliance, and give employees a better retirement experience.

Want to learn more or start your provider evaluation? Get started (for employers).

References

• Escalent. (2024). Retirement Planscape Report. https://www.napa-net.org/news/2024/7/new-reasons-switching-401k-recordkeepers-emerge

• J.P. Morgan. (2024). Changing 401(k) Providers: Questions to Ask and What to Know. https://www.jpmorgan.com/insights/retirement/changing-401k-providers-questions-to-ask-and-what-to-know

• Human Interest. (2024). How to Change Your 401(k) Provider. https://humaninterest.com/learn/articles/change-401k-provider

• Department of Labor. (2024). Blackout Notice Requirements. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/blackout-notices