PEO Exit Playbook & Checklist

When you need this

A PEO exit usually starts with a renewal quote or an investor’s question about co-employment. Whatever starts it, the deadline is set by the PEO’s notice window, usually 30 to 90 days, and by the state agencies that issue your tax accounts. The work is not hard. The sequence is, and this playbook is the sequence.

Inside the playbook

• The notice window, mapped backward. Your notice date, contract terms, plan year and state filing lead times set the go-live date. The worksheet works back from it, week by week.
• Notice-period and plan-year traps. The clauses that reset the clock, and the plan-year boundary that decides whether your people’s deductibles reset and they pay twice in twelve months.
• Long-lead items first. Workers’ comp marketing, the leave vendor and the 401(k) spin-off start before you give notice, and state withholding and unemployment accounts open as early as the date allows. Under a PEO those accounts belonged to the PEO, so you need your own in every state where it reported for you.
• Payroll cutover on a period boundary. The last PEO cycle and your first, with a parallel run compared line by line in between.
• Benefits, workers’ comp and state registrations, in order. What your broker needs from your census, and when coverage has to be in force so there is no gap.
• What to have in hand before you give notice. The list that stops the exit stalling in week two.
• The exit planning worksheet, as cells you type into.

How to use it

1. Put the notice date, the plan year and your states into the worksheet. The go-live date falls out of those, and it is usually January 1 or a quarter start.
2. Open every state registration the week you give notice. Agency processing time is the one constraint nobody on your side controls.
3. Build and load the new HRIS while the registrations process, with year-to-date payroll reconciled against the PEO’s registers.
4. Run the parallel payroll two periods before cutover, so there is room to fix what it finds.
5. Give notice when the checklist says you are ready, and time the cancellation for after the PEO’s last run.

One thing to get right

Never plan a payroll date on the assumption that a state account number will arrive by then. Treat every published processing estimate as the optimistic case.