Identification

• A 401k retirement has several moving parts. These components include an outside plan administrator that organizes the structure of the plan, asset managers who invest assets on behalf of plan members and a custodian bank, which is responsible for holding assets and paying plan members upon retirement. The custodian holds the title to plan assets on behalf of the 401k plan sponsor. The custodian bank works closely with the asset managers so a good working relationship between both parties is beneficial.
  
  

Search Process

• When a contract with a custodian bank is set to expire, this might be an ideal time for a plan member to address the change with an internal investment committee for the 401k. Often, an outside investment consultant will take the lead on any search process but this doesn't mean that plan members cannot offer ideas. The consultant will launch a Request for Proposal process, where custodian banks are welcome to submit proposals bidding for the contract.
  
  

Controversy

• Several factors could play into a change in custodian firms including a fee scandal. Custodians are responsible for handling a plan's money in domestic currency and foreign currency if a plan invests overseas. In 2011, five U.S. public pensions resorted to filing legal action targeted at major custodian banks for allegedly overcharging in a currency conversion process. State Street and Bank of New York Mellon were the custodians at the heart of the controversy, according to Pensions & Investments.
  
  

IRA

• Upon leaving a job where there is a 401k account established, an employee has the option to transfer assets to an Individual Retirement Account. Before transferring money to the IRA, find a custodian bank to hold the assets. Brokerage firms and mutual funds have these services. Fees are charged to transfer assets in addition to a yearly fee. Compare different fee structures and also the types of investments that a custodian bank can accomplish to ensure it lines up with retirement goals.