401k Question - In-service Rollovers

[banyanfinancial]

I have suggested to one of my clients that their 401k should include annuity options. I also suggested that they amend the 401k document to include an in-service rollover option. Does anyone know the verbiage to tell them that should be included in the amendment document?

 

[Franz Kafka]

I have suggested to one of my clients that their 401k should include annuity options. I also suggested that they amend the 401k document to include an in-service rollover option. Does anyone know the verbiage to tell them that should be included in the amendment document?

Why would I as an emplyer want an in-service rollover option?

 

[banyanfinancial]

The funds have declined so severely that the employees asked what could they do to preserve their funds. The employer asked if they could move the monies out of the 401k at the request of each individual employee. They are also considering changing administrators and simplifying their strategies.

 

[Norwayguy]

Does anyone know the verbiage to tell them that should be included in the amendment document?

Even if I knew the verbiage, You shouldn't tell the client how to write up there plan document. That what you need a good attorney for. Don't want to be accused of practicing law without a license.

 

[djs]

The funds have declined so severely that the employees asked what could they do to preserve their funds. The employer asked if they could move the monies out of the 401k at the request of each individual employee. They are also considering changing administrators and simplifying their strategies.

You are trying to solve the wrong problem.
Is there no option that is less volatile in the 401K? Even money market?

Most 401K's are pretty much unmanaged. You can either opt to become their administrator and offer your services, or you are probably wasting your time.

Chances of the current administrator allowing in-service rollovers until the end of the plan year is pretty slim. I could be wrong, but I don't think this is something that can 'just happen'. I've never tried it before.

Dan

 

[Franz Kafka]

The funds have declined so severely that the employees asked what could they do to preserve their funds. The employer asked if they could move the monies out of the 401k at the request of each individual employee. They are also considering changing administrators and simplifying their strategies.

I had helped open 1 401K plan in my first year and still regret it. IMO there are too many hands in the pot to make it cost effective. One option may be to close the plan and start a SIMPLE IRA instead (if less than 100 employees). Once the plan is closed employees can roll em out. SIMPLE needs no TPA (saves fee) and if employer's currently using Safe Harbor contribution he/she can decrease the amount by 1%. Employees can open their SIMPLE anywhere they choose. Only disadvantage is maximum employee contribution is about 5K less than 401K. Someone correct me if I'm wrong.

 

[Norwayguy]

I had helped open 1 401K plan in my first year and still regret it. IMO there are too many hands in the pot to make it cost effective. One option may be to close the plan and start a SIMPLE IRA instead (if less than 100 employees). Once the plan is closed employees can roll em out. SIMPLE needs no TPA (saves fee) and if employer's currently using Safe Harbor contribution he/she can decrease the amount by 1%. Employees can open their SIMPLE anywhere they choose. Only disadvantage is maximum employee contribution is about 5K less than 401K. Someone correct me if I'm wrong.

It not that I disagree but the Simple IRA may not offer all the options the 401K can...availability of Loans, ability to use R shares (if you are Series 6). The other problem of the Simple IRA is the employees in a 401K they need the plan adminstrator to sign off for hardship distributions/loans etc...In the Simple IRA (client gotta have this plasma TV, calls custodian and since this is only a glorified IRA) the client can pull the money out.I have seen the need for inservice rollovers before if there is not an adaquete selection of funds nd fund classes and management won't change the politics of Retirement plans and drive you nuts.