When Rollover Options Score the Same: What Advisors Should Verify Before Recommending One

Rollover analysis often results in close calls—sometimes, two retirement account options produce the same or nearly identical score in a comparison model. For advisors and compliance professionals, a tie is not a shortcut. It is a signal to slow down, verify inputs, and document, in precise detail, why a final recommendation is in the client’s best interest under PTE 2020-02. Relying solely on a scoring output is not sufficient to satisfy DOL fiduciary standards or avoid prohibited transaction risk. Every step, assumption, and disclosure must be accurate, defensible, and supported in the audit file.

Below, we break down the actions to take, documentation requirements, and practical examples that will strengthen compliance confidence and streamline DOL audit preparation. Simple Advisor Tools provides a purpose-built workflow to address each compliance step, ensuring your files satisfy regulatory scrutiny and withstand retrospective review.

Definition: What Advisors Should Verify When Rollover Options Score the Same

• Advisors must not use identical scores as the sole basis for a recommendation. PTE 2020-02 requires specific written reasons for every rollover recommendation, including documentation of relevant factors such as fees, services, investment menu, plan features, and client profile.
• Verification means re-checking assumptions, supporting every input with source documents (e.g. Form 5500), and justifying the final choice in terms the client and a regulator can follow years later.
• All required disclosures, acknowledgment forms, and supporting templates must reflect the actual comparison, not just the result of a software scoring engine.

Why a Tie Score Demands Extra Scrutiny

• A tie usually means the options are close enough that minor changes or missing data could tip the balance in either direction. This is an audit trigger, not a tiebreaker.
• Under DOL and SEC guidance, best interest documentation must articulate why the client’s needs, objectives, and circumstances lead to a specific recommendation—with all trade-offs and lost features accounted for.
• If documentation merely states both options are similar, or defaults to the higher-paying outcome, this creates exposure under the prohibited transaction rules.

Step-by-Step: PTE 2020-02 Tie Score Verification Checklist

1. Re-confirm all client profile fields
   Verify data for age, tax status, intended retirement date, liquidity needs, risk tolerance, current cash flow requirements, and health circumstances. Incomplete data is a leading cause of tie scores for non-comparable options.
2. Validate plan and IRA fee analysis accuracy
   
   • Use current Form 5500 data for plan fees and participant-level administrative costs.
   • Request and attach the latest plan fee disclosure document.
   • For the IRA, perform a side-by-side breakdown: advisory fee, investment expense ratios (for the actual funds client will use), custodial and platform charges.
   • Document the dollar impact—e.g., a $250,000 account with a 0.50% fee difference is $1,250/year, which must be justified or offset by services.
3. Line-by-line service comparison
   
   • Itemize existing plan services: advice helpline, financial education, managed accounts, online planning tools, loan/hardship options.
   • Match to IRA or new account offerings: direct planning access, tax strategy, estate support, ongoing monitoring, technology tools.
   • Indicate for each service: Available in Plan (Y/N), Used by Client (Y/N); Available in IRA (Y/N), Needed by Client (Y/N).
4. Inventory plan features that may not transfer
   
   • Creditor protection under ERISA (higher in plans than IRAs in most states)
   • Age 55 penalty-free withdrawals (possible in plans, not in IRAs)
   • Stable value/fixed account investments, plan loans, employer stock (net unrealized appreciation)
   Explicitly note if any feature is decisive for the client's situation.
5. Compare investment options using real allocations
   Map existing plan choices by ticker/share class to the IRA lineup. Consider asset class, share class quality, diversification, and expense ratio. Document where the IRA truly offers “more” or “better.”
6. Address tax, withdrawal, and timing factors
   
   • Direct versus indirect rollover status—risk of missing 60-day window, withholdings, and re-deposit rules
   • Roth conversion or after-tax basis handling
   • Required Minimum Distributions and plan timing flexibility
7. Write specific rationale for the recommendation
   The audit file must give a fact-driven reason: “Although both options score 85, the plan’s stable value fund and ERISA protection are decisive for this client’s risk profile,” or “The IRA’s broader tax planning and ongoing reviews offset its higher cost, per the client’s stated goals.” Vague conclusions are not compliant.
8. Generate and attach all disclosure forms and templates
   
   • Include PTE 2020-02 disclosure form or template output with exact fields populated from above steps (e.g., costs, services, lost features, client acknowledgments).
   • Ensure electronic or wet signatures are collected and preserved with a clear timestamp.
9. Save all documentation and date stamps to the audit file
   Before delivering your recommendation, store supporting documents, forms, and comparison notes in a central system capable of 7-year retention (such as Simple Advisor Tools).

What to Write in the Audit File (Example Language)

• Attach: Plan fee disclosure (Form 5500 or 404a-5), IRA/brokerage fee schedule, side-by-side service comparison, investment lineup analysis, and the signed PTE 2020-02 disclosure form or template.
• State: "Although both the plan and IRA score 90, the plan’s age-55 withdrawal feature is critical for the client’s early retirement goal. Rollover is not recommended at this time."
• Or: "Despite equal scores, client has expressed clear preference for ongoing tax and retirement planning. The IRA’s higher annual cost ($950) is offset by planning access per client directive."

See our related piece, When Staying in the Plan Wins: What Advisors Should Document in the Rollover Analysis, for detailed plan retention documentation guidance.

Compliance Officer Oversight of Tie Score Cases

• Establish a review workflow where any recommendation based on a tied or near-tied score triggers special scrutiny. Supervisors should confirm:
• Final recommendation is supported by documented facts, not just score output.
• PTE 2020-02 disclosure form and templates accurately reflect cost, service, and feature summary.
• Audit file is complete with all required fields and date stamps.
• Advisors avoid "defaulting" to revenue-maximizing recommendations in tie cases.
• Flag near-ties (e.g. less than 2-3 point difference on a 100-point scale or 5% delta) for secondary review and electronic checklist confirmation.
• Simple Advisor Tools provides an audit trail with activity logs and supports multi-user review for firmwide compliance workflow.
• For more, review How CCOs Should Select Rollover Files for a PTE 2020-02 Audit Sample for sample selection and red-flag criteria in supervision.

Common Mistakes and Risk Factors

• Recommending the higher revenue path without documentary evidence of client benefit.
• Ignoring or overlooking ERISA protections or plan-only features (age-55 withdrawal, loan access, stable value funds).
• Relying on generic templates that do not populate with specific client facts, fee calculations, or service descriptions.
• Failing to attach fee schedules, plan documents, signed forms, or timestamped rationale into the audit file.
• Using the scoring model output as justification, rather than a supplement to the written comparison record.

If your file lacks supporting evidence, it will not withstand a DOL, SEC, or FINRA audit. Standardized, audit-ready documentation and checklists are a primary benefit of using a tool like Simple Advisor Tools.

Documenting a Tie Score: Practical 10-minute Workflow

1. Open client record, confirm profiles are complete and current.
2. Pull and attach plan fee disclosure and IRA proposal fee data (Form 5500, firm invoice, digital summary).
3. Compare and document line-item services using a structured table.
4. List and explain plan features and their impact on client needs.
5. Confirm investment menu quality and any constraints by share class or diversification.
6. Review timing, tax, and withdrawal considerations.
7. Generate a PTE 2020-02 disclosure form or template with client-specific fields (fees, services, rationale), collect acknowledgments.
8. Save all items in the audit file, with date/time stamp before the recommendation is delivered.

Efficient, repeatable, and audit-ready—for independent RIAs and broker-dealer compliance staff alike.

Best Practices: Avoiding Pitfalls in Tie-Score Rollover Analysis

• Never default to a recommendation based on small, unsupported distinctions. Require written evidence for all material claims.
• Use both plan and IRA source documents and Form 5500 data wherever possible.
• Always address the client’s stated intent and priorities—liquidity, ongoing advice, tax coordination, or stable cash flows.
• File the rationale, fee summary, service comparison, signed disclosure, and supporting documents in a system with compliant retention (at least seven years).
• Perform (and document) a secondary review for every case with a score difference below policy threshold.

For more documentation tips, consult our guide on What Advisors Should Document Before and After a 401(k) Rollover Recommendation.

FAQ: Tie Score Rollover Analysis for Advisors