American Funds 401k Advise

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Kickstart
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American Funds 401k Advise

Post by Kickstart » Thu Feb 15, 2018 10:34 am

***NEW QUESTION ABOUT THE SIMPLE 5304 VS 5305 PLEASE READ COMMENT AFTER 6/19/2018***
Last edited by Kickstart on Sat Jun 23, 2018 9:56 am, edited 3 times in total.

krow36
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Re: American Funds 401k Advise

Post by krow36 » Thu Feb 15, 2018 10:46 am

Is your employer’s plan a 401k or a SIMPLE IRA? If it’s a SIMPLE, look at your paperwork and see if it’s a Form 5304 or a 5305. If it’s a SIMPLE, have you contributed to it for 2 years?

tymishu
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Re: American Funds 401k Advise

Post by tymishu » Thu Feb 15, 2018 11:00 am

I have AF 401k through my employer also. I cannot give you any advice other than to tell you mine are doing reasonably well. Then again in this bull market it is not easy to not do okay. I have

American Funds EuroPacific Gr R4 - 20%
American Funds Growth Fund of Amer R4 - 20%
American Funds New Perspective R4 - 20%
American Funds Fundamental Investors R4 - 20%
American Funds Invmt Co of America R4 - 20%

The cumulative return in my 401K portfolio is 19.7% 2/17-2/18, 57.3% 2/16-2/18, 39.5% 2/15-2/18. But I think I rebalanced about a year ago. I lost about 6% during the recent correction. It has not recovered yet as of today.

I would recommend using "personal capital" to track your assets. The app loads on your smartphone. What I like about personal capital is it tracks how much fees the fund managers are taking out of your account.

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goingup
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Re: American Funds 401k Advise

Post by goingup » Thu Feb 15, 2018 11:12 am

Kickstart-
I don't think R4 shares have sales loads. Most times the funds in 401Ks don't have sales loads.

You can have a regular (I don't think you mean SIMPLE) IRA at any broker, in addition to your 401K plan. I wouldn't use American Funds for an IRA. I'd open a Roth IRA at Vanguard, Fidelity or Schwab and contribute $5,500 per year, if possible.

onourway
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Re: American Funds 401k Advise

Post by onourway » Thu Feb 15, 2018 11:15 am

I think it's pretty clear that he has just what he says he has - a Simple IRA that purchases A shares with a front-load.

@Kickstart

American Funds are good as far as actively managed funds go. The front-load is too bad, but it's still worth receiving the employer match at the very least.

Do you have an Asset Allocation you are targeting? If not, developing one as part of your Investor Policy Statement is step #1.

TylerS7
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Re: American Funds 401k Advise

Post by TylerS7 » Thu Feb 15, 2018 11:17 am

My girlfriend's company has a SIMPLE IRA with American Funds, I thought about setting up a frozen SIMPLE IRA at vanguard and transferring everything over. What we decided is she wanted simplicity, and once her plan's assets reach a certain amount then the front load is lowered and finally waived, so she's just going to stick with the American Funds account. Pertinent information for a transfer to Vanguard is in this document on page 22:

https://personal.vanguard.com/pdf/s194.pdf?2210092784

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goingup
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Re: American Funds 401k Advise

Post by goingup » Thu Feb 15, 2018 11:34 am

onourway wrote:
Thu Feb 15, 2018 11:15 am
I think it's pretty clear that he has just what he says he has - a Simple IRA that purchases A shares with a front-load.
I could be wrong, but what I read is he has an American Funds R4 share Target Fund in a company-sponsored 401K plan with a 3% match. He thinks there is a 3.5% load, which I'm questioning. Loads are usually waived in a 401K plan. We own American Funds R6 shares in a 401K.

As to whether he's asking about a simple (regular) IRA or a SIMPLE IRA, I do not know. His advisor says only A shares would be available in an IRA, which I wouldn't recommend.

His post is a little confusing, so I hope he returns to clarify. :beer

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Feb 15, 2018 11:48 am

Sorry it is a Simple IRA not a 401k....
With a front end sales load of 3.5%

Switching is not any option considering I get a match through work. I did try switching my Roth IRA to Vanguard, but they made me mad so now I'm switching that over to Schwab. I guess because I'm new to investing is there anyway to better my portfolio and lower my ER, or ever sales loads with the simple IRA?

krow36
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Re: American Funds 401k Advise

Post by krow36 » Thu Feb 15, 2018 11:56 am

Please read the Wiki on SIMPLE IRAs, especially the section on transfers.
https://www.bogleheads.org/wiki/SIMPLE_IRA
You can do asset transfers from your AF SIMPLE IRA to a Vanguard "frozen" SIMPLE IRA account. If your first contribution was more than 2 years ago, you can use a traditional IRA instead of a SIMPLE frozen account. You and your employer continue to contribute to the AF SIMPLE and you can make repeated transfers out. Is your SIMPLE IRA a Form 5304 or 5305?

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BL
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Re: American Funds 401k Advise

Post by BL » Thu Feb 15, 2018 11:59 am

krow36 wrote:
Thu Feb 15, 2018 10:46 am
Is your employer’s plan a 401k or a SIMPLE IRA? If it’s a SIMPLE, look at your paperwork and see if it’s a Form 5304 or a 5305. If it’s a SIMPLE, have you contributed to it for 2 years?
If you answer as to what type of SIMPLE, you may get a potentially valuable suggestion here!

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Feb 15, 2018 12:52 pm

I'm not transferring to Vanguard all the time. I assume the front end load would still come out at AF, prior to transfer? AF is a good actively managed fund I understand even with the front end loads. I'm just trying to figure out the best portfolio there at AF in class A mutual funds. Just some experience with AF funds would be great. I would prefer a AA of 90/10 or 80/20 stock and bonds. Three to five fund portfolio is fine.

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ruralavalon
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Re: American Funds 401k Advise

Post by ruralavalon » Thu Feb 15, 2018 12:53 pm

BL wrote:
Thu Feb 15, 2018 11:59 am
krow36 wrote:
Thu Feb 15, 2018 10:46 am
Is your employer’s plan a 401k or a SIMPLE IRA? If it’s a SIMPLE, look at your paperwork and see if it’s a Form 5304 or a 5305. If it’s a SIMPLE, have you contributed to it for 2 years?
If you answer as to what type of SIMPLE, you may get a potentially valuable suggestion here!
Kickstart please let us know if the SIMPLE IRA is a Form 5305 or 5304.

And how long have you been in this plan?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

onourway
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Re: American Funds 401k Advise

Post by onourway » Thu Feb 15, 2018 1:14 pm

Kickstart wrote:
Thu Feb 15, 2018 12:52 pm
I'm not transferring to Vanguard all the time. I assume the front end load would still come out at AF, prior to transfer? AF is a good actively managed fund I understand even with the front end loads. I'm just trying to figure out the best portfolio there at AF in class A mutual funds. Just some experience with AF funds would be great. I would prefer a AA of 90/10 or 80/20 stock and bonds. Three to five fund portfolio is fine.
Do you have any other accounts elsewhere? I think AF does better with equity than with bonds. You could do fine holding The Growth Fund of America here and holding your bonds in an IRA elsewhere. AGTHX despite its size still pretty much tracks the market index as a whole despite its fee. (Ignoring the front-load which you have no choice in).

Do you want an international component?

deltaneutral83
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Re: American Funds 401k Advise

Post by deltaneutral83 » Thu Feb 15, 2018 3:24 pm

goingup wrote:
Thu Feb 15, 2018 11:34 am

I could be wrong, but what I read is he has an American Funds R4 share Target Fund in a company-sponsored 401K plan with a 3% match. He thinks there is a 3.5% load, which I'm questioning. Loads are usually waived in a 401K plan. We own American Funds R6 shares in a 401K.
These seem to have a much lower ER than the other "R" class(es), why is that? IN fact, for actively managed funds, those ER's aren't that high.

onourway
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Re: American Funds 401k Advise

Post by onourway » Thu Feb 15, 2018 3:31 pm

deltaneutral83 wrote:
Thu Feb 15, 2018 3:24 pm
goingup wrote:
Thu Feb 15, 2018 11:34 am

I could be wrong, but what I read is he has an American Funds R4 share Target Fund in a company-sponsored 401K plan with a 3% match. He thinks there is a 3.5% load, which I'm questioning. Loads are usually waived in a 401K plan. We own American Funds R6 shares in a 401K.
These seem to have a much lower ER than the other "R" class(es), why is that? IN fact, for actively managed funds, those ER's aren't that high.
He has A class shares not R. Unfortunately he's paying a 3.5% load on purchase.

Our 401k has these same A-class share options, fortunately without the front-load. I'd rather have a different provider, but American Funds has done ok by us.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Feb 15, 2018 3:32 pm

ruralavalon wrote:
Thu Feb 15, 2018 12:53 pm
BL wrote:
Thu Feb 15, 2018 11:59 am
krow36 wrote:
Thu Feb 15, 2018 10:46 am
Is your employer’s plan a 401k or a SIMPLE IRA? If it’s a SIMPLE, look at your paperwork and see if it’s a Form 5304 or a 5305. If it’s a SIMPLE, have you contributed to it for 2 years?
If you answer as to what type of SIMPLE, you may get a potentially valuable suggestion here!
Kickstart please let us know if the SIMPLE IRA is a Form 5305 or 5304.

And how long have you been in this plan?
I dont know which. I asked the financial adviser and he just said yes to both...?!?! I cant find it anywhere.

essbeer
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Re: American Funds 401k Advise

Post by essbeer » Thu Feb 15, 2018 3:46 pm

I've got all the ones your FA recommended and they've done fine. Morningstar Xray is great for American Funds. I would probably want a world balanced portfolio since American Funds seems to have a better advantage internationally. I don't recommend buying any bonds from American Funds, like others have said.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Feb 15, 2018 4:19 pm

essbeer wrote:
Thu Feb 15, 2018 3:46 pm
I've got all the ones your FA recommended and they've done fine. Morningstar Xray is great for American Funds. I would probably want a world balanced portfolio since American Funds seems to have a better advantage internationally. I don't recommend buying any bonds from American Funds, like others have said.
I was comparing these for the first time, and I like the following.

AGTHX Growth Fund of America ER 0.64%
ANEFX New Economy Fund ER 0.78%
ANCFX Fundamental Investors ER 0.62%
AWSHX Washington Mutual Investors ER 0.58%

Add more international or no?
ANWPX New Perspective Fund ER 0.75%
or
CWGIX Capital World Growth and Income Fund ER 0.77%

essbeer
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Re: American Funds 401k Advise

Post by essbeer » Thu Feb 15, 2018 5:12 pm

I have both ANWPX and CWGIX. ANWPX has especially been a standout while I've held it. With American Funds it seems like the more funds, the better since it reduces your manager risk (already pretty low, but free lunch is free lunch.) I just try and spread them evenly around the globe.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Mon Feb 19, 2018 11:29 am

This is what I decided on. I know is mostly US large cap growth, but I figured this is how you try and index the S&P 500 when you dont have that index fund to choose. ER is .66%

Growth Fund of America 25%
Washington Mutual 20%
New Perspective 20%
Fundamental investors 20%
New Economy 15%

Kickstart
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Re: American Funds SIMPLE IRA Advise

Post by Kickstart » Tue Jun 19, 2018 4:17 pm

New question....

If I was in a 5305- SIMPLE is that when you do a freeze simple and have to then transfer every bi weekly contribution to the financial custodian of my choice?

And if my employer has the 5304-SIMPLE do you just ask to switch to someone like Schwab and then my bi weekly contributions will go straight to Schwab or custodian of my choice?

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ruralavalon
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Re: American Funds SIMPLE IRA Advise

Post by ruralavalon » Tue Jun 19, 2018 7:57 pm

Kickstart wrote:
Tue Jun 19, 2018 4:17 pm
New question....

If I was in a 5305- SIMPLE is that when you do a freeze simple and have to then transfer every bi weekly contribution to the financial custodian of my choice?

And if my employer has the 5304-SIMPLE do you just ask to switch to someone like Schwab and then my bi weekly contributions will go straight to Schwab or custodian of my choice?
Which is it? Is this a 5304 or 5305 plan? And how long have you been in this plan?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Kickstart
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Re: American Funds SIMPLE IRA Advise

Post by Kickstart » Wed Jun 20, 2018 8:02 am

ruralavalon wrote:
Tue Jun 19, 2018 7:57 pm
Kickstart wrote:
Tue Jun 19, 2018 4:17 pm
New question....

If I was in a 5305- SIMPLE is that when you do a freeze simple and have to then transfer every bi weekly contribution to the financial custodian of my choice?

And if my employer has the 5304-SIMPLE do you just ask to switch to someone like Schwab and then my bi weekly contributions will go straight to Schwab or custodian of my choice?
Which is it? Is this a 5304 or 5305 plan? And how long have you been in this plan?
I dont know yet
Last edited by Kickstart on Wed Jun 27, 2018 9:10 pm, edited 1 time in total.

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ruralavalon
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Re: American Funds SIMPLE IRA Advise

Post by ruralavalon » Wed Jun 20, 2018 8:33 am

Kickstart wrote:
Wed Jun 20, 2018 8:02 am
ruralavalon wrote:
Tue Jun 19, 2018 7:57 pm
Kickstart wrote:
Tue Jun 19, 2018 4:17 pm
New question....

If I was in a 5305- SIMPLE is that when you do a freeze simple and have to then transfer every bi weekly contribution to the financial custodian of my choice?

And if my employer has the 5304-SIMPLE do you just ask to switch to someone like Schwab and then my bi weekly contributions will go straight to Schwab or custodian of my choice?
Which is it? Is this a 5304 or 5305 plan? And how long have you been in this plan?
I dont know yet. Financial adviser seems to be avoiding the question after I asked my boss about moving to a cheaper custodian. I started the plan 5/2012.
You could ask your employer for a copy of the form.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Dottie57
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Re: American Funds 401k Advise

Post by Dottie57 » Wed Jun 20, 2018 8:44 am

onourway wrote:
Thu Feb 15, 2018 11:15 am
I think it's pretty clear that he has just what he says he has - a Simple IRA that purchases A shares with a front-load.

@Kickstart

American Funds are good as far as actively managed funds go. The front-load is too bad, but it's still worth receiving the employer match at the very least.

Do you have an Asset Allocation you are targeting? If not, developing one as part of your Investor Policy Statement is step #1.
I echo American funds do pretty well. My Trad IRA did pretty well with AF even with the load. I’ve since moved on to fidelity.

I think a poster above is asking what type of SIMPLE IRA OP has. I think it is important because OP may be able to roll it into a Trad IRA after a relatively short period of time. Of course I may be wrong - the question about the setup triggered a thought.

OP - good luck and DO CONTRIBUTE.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Wed Jun 20, 2018 12:44 pm

It is a 5304_SIMPLE with American Funds. So what are my options if I wanted to switch to another brokerage account and would I have to transfer funds biweekly from my employers custodian American Funds to a new custodian of my choice?

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Jun 21, 2018 9:11 am

removed
Last edited by Kickstart on Wed Jun 27, 2018 9:02 am, edited 3 times in total.

Dottie57
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Re: American Funds 401k Advise

Post by Dottie57 » Thu Jun 21, 2018 10:36 am

Send email requesting the information you want. Include a link to the government requirements. Or send it regular mail with receipt from USPS ( costs more but is great to track). Tell the advisor when you expect the info. Keep a paper trail.

retiredjg
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Re: American Funds 401k Advise

Post by retiredjg » Thu Jun 21, 2018 10:53 am

I think the first thing to do is ask your employer and/or the custodian of the SIMPLE IRA to provide you with documents related to your enrollment in the plan. I believe there should be a separate document for each year.

You think you've never seen the form, but that does not mean you didn't actually sign something. If they provide you with the form and the signature is actually yours, you are stuck until the end of the year.

Even if you didn't sign anything (seems unlikely), trying to man-handle this into a different plan right now is going to cause friction with your employer. There is a very good chance your employer has no idea that this plan is being handled incorrectly. From your bosses perspective, he turned this over to a trusted friend. As far as your employer is concerned, all may be as it should be.

In about October, the employer is supposed to provide you with forms for the following calendar year. When the next enrollment period rolls around, you need to get a form and indicate exactly which financial institution you wish to use. Obviously, it will be something different from what the employer has in mind, but the employer has no choice if the employer wants to use the 5304 plan. It will be up to the employer to make sure your contribution gets to the location you desire. Some find this irritating. Some don't care.


Here is the horse's mouth on SIMPLE IRA. Read (or at least skim) all the links. Read each of the forms - they are very understandable. Become knowledgeble on the subject so you don't stick your foot in your mouth.

https://www.irs.gov/retirement-plans/pl ... e-ira-plan

Consider which portions you might want to pass on to your employer and just how you want to do it. Obviously, it is in your best interest to be cautious in how you tell your employer that they have failed in their responsibility for this agreement between you and them. You may find that the plan simply ceases to exist and that would be progress in the wrong direction.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Thu Jun 21, 2018 1:39 pm

retiredjg wrote:
Thu Jun 21, 2018 10:53 am

You think you've never seen the form, but that does not mean you didn't actually sign something. If they provide you with the form and the signature is actually yours, you are stuck until the end of the year.

Even if you didn't sign anything (seems unlikely), trying to man-handle this into a different plan right now is going to cause friction with your employer. There is a very good chance your employer has no idea that this plan is being handled incorrectly. From your bosses perspective, he turned this over to a trusted friend. As far as your employer is concerned, all may be as it should be.
My boss is my employer. He asked if I wanted to invest in retirement, I replied yes, and was emailed by the financial adviser who invested us with American Funds. Never signed or saw any forms here other than a W4. And I just asked my boss/employer if her could switch any of us to another cheap low cost investment company in an email and sent him a video explaining the money lost for his employees by not choosing to do so. And that when the financial adviser called me right away, haven't spoken to him but once since 2012. I HAVE NEVER BEEN GIVEN AN OPTION OR TOLD I HAD AN OPTION, OR SEEN AND FORM OF ANY KIND.
Last edited by Kickstart on Wed Jun 27, 2018 9:11 pm, edited 1 time in total.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Fri Jun 22, 2018 4:33 pm

My FA says we are in a 5305 now after three days ago he said we had a 5304. Mind you I have never seen either form, nor have I even been informed of which one we are in. I'm waiting to see what I'm in fact in 5304 or 5305.

So now what? I've been in the plan since 2012, can I just have my employer move my SIMPLE IRA to Schwab and not have to do any freeze simple, or traditional IRA transfer? I want to continue my same SIMPLE IRA but with Schwab instead of AF.

Advice from Schwab was transfer my SIMPLE IRA from AF to Schwab SIMPLE IRA account, and have my employer fill out paperwork to send my SIMPLE IRA contributions and his match through the "master" aka AF, over to Schwab biweekly. Is that even possible?
Last edited by Kickstart on Fri Jun 29, 2018 2:40 pm, edited 1 time in total.

retiredjg
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Re: American Funds 401k Advise

Post by retiredjg » Fri Jun 22, 2018 6:34 pm

Probably good to see what the documents actually say before making plans.

pkcrafter
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Re: American Funds 401k Advise

Post by pkcrafter » Fri Jun 22, 2018 7:23 pm

Kickstart, I have a feeling your boss had about as much knowledge of the plan as you did. It's the advisor who is responsible for a lack of information, and now I wonder what your boss is thinking. You are now forcing the advisor to do things he should have been doing all along. I think by the time you're done you will know more than both of them, although the advisor's stupidity may be intentional.

Here's an earlier discussion that might help a bit.

viewtopic.php?t=207045


Paul

edited.
Last edited by pkcrafter on Sat Jun 23, 2018 11:15 am, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

retiredjg
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Re: American Funds 401k Advise

Post by retiredjg » Sat Jun 23, 2018 6:24 am

My understanding is that a SIMPLE IRA is an agreement between an employer and an employee. The fact that the employer asks a 3rd party to oversee the mechanics does not relieve the employer of responsibility of getting things done right.

I do not believe an employer can take money out of an employee's paycheck without written permission. And I do not believe that a third party can open a financial account for an employee without written permission. You may think you've never signed anything, but it seems unlikely. If that is how it happened, there are some serious issues that need to be addressed. By that I mean addressed with your boss, not with American Funds or their representative. That is where the responsibility ultimately lies (even though I suspect your boss does not know this).

Since you probably want to keep your job, becoming informed and addressing it reasonably is your best bet. To become informed, I would again suggest the IRS link that I posted earlier.


There is something about your situation that reminds me a little of a recent thread on a similar subject. When you say you were never given a choice, it could be because the paperwork was already filled out when you got the form. See this thread.

viewtopic.php?f=1&t=246339


Your solution for future contributions lies in which type of plan you have. Until you see some paperwork, you don't really know what plan you have. Even if your employer has not done this in the past, paperwork is required from the employer in October of each year - for the plan starting in January of the next year. Insist on seeing it. At that point, we can help you figure out what to do with the future contributions.

Yes, at least some of the information you got from Schwab seems to be possible but the exact mechanism depends on whether it is a 5304 or 5305 plan as I recall.

As for past contributions, I don't think it matters if the plan is 5304 or 5304 - either can be rolled to an IRA of your choosing because 2 years have passed since your first contribution to the plan. If you read the IRS link (and included links) you will find this information there.

Kickstart
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Re: American Funds 401k Advise

Post by Kickstart » Sat Jun 23, 2018 9:41 am

Thanks for the responses. I have read every official IRS document I can in detail and multiple past posts here on the same subject. I understand the 5304, the 5305 seems a little more difficult as to setting up the transfer monthly from AF to Schwab. I was curious if anyone is transferring to Schwab in a SIMPLE IRA (not interested in creating a traditional IRA). Lots of examples on here about Vanguard and what they call a frozen SIMPLE. Now I was hoping to have someone tell me the details about Schwab. I've had a bad experience taking advise from Vanguard on a previous transfer, and want to make sure I get this one right with Schwab. I will call Schwab back multiple time til I get the same advise from what sounds like competent retirement account specialists.

!!! Also is possible that my financial adviser or employer doesn't have us in a 5304 or 5305, since none of us have ever filled one out?!?!?! Thus they decide on a 5304 or 5305 this week, after employees have had retirement accounts for over 12 years with him! I understand its my employers responsibility and not the private financial advisers. But my employer has no clue when I ask him and defers everything to the financial adviser (they are friends mind you). And the financial adviser has told me now we are in a 5304 and then days later we are in a 5305. Are they just making this [stuff up --admin LadyGeek] because now I'm questioning them. And the financial adviser is suppose to send me my enrollment paper work, will there be anything that outlines what plan we are in if we never even filled out a 5304 or 5305?! Or is he trying to create paperwork that shows we are somehow in one or the other, even though I have never signed a paper for him or my boss. I have the original email from this finance company, (I provided it above) only thing I ever provided them was their unofficial typed form asking me my name address beneficiaries and so on. No signature no written text no explanation no choices no nothing.

Keep in mind I am the senior employee / manager and I help my (out of state) boss set up new employees with all their new hire paperwork. NONE OF US HAVE EVER SEEN A 5304 OR 5305 EVER! We don't sign anything we aren't given any options. My boss lives out of state and is friends with the financial adviser who works as a financial adviser in my boss's local town. Adviser chooses AF as the financial custodian for his own benefit to make money as a actively managed fund manager /adviser rather than offer us a low cost fund he can't advise and make money with.

I sent my boss an email months ago with a video from Tony Robbins made for employees to send to their employers illustrating the retirement money lost by leaving their employees in a high cost actively managed fund. When my boss got that email he sent it to the financial adviser, and I got a call right away by the adviser telling me we could create a lower ER portfolio instead of the target date fund I was in now. (First time my adviser has even spoken to me.) My used car salesmen radar is going off by now. Can these two be trusted since I don't think either one of them has us in either a 5304 or 5305 but instead my employer just put his friend in charge because he manages a finance office and the adviser chose to only offer us his firm, and the adviser doesn't even know or care to make sure that my boss had a 5305 before he did so. I think this week they are both going to try and cover their tracks and create some unofficial paperwork showing we have always been in a 5305! Illegal [(removed) --admin LadyGeek] I understand. I assume my employer will provide all employees a 5305 this year and will get away with it as if nothing ever happened.
Last edited by Kickstart on Sat Jun 23, 2018 10:54 am, edited 1 time in total.

retiredjg
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Re: American Funds 401k Advise

Post by retiredjg » Sat Jun 23, 2018 10:29 am

Kickstart wrote:
Sat Jun 23, 2018 9:41 am
I was curious if anyone is transferring to Schwab in a SIMPLE IRA (not interested in creating a traditional IRA). Lots of examples on here about Vanguard and what they call a frozen SIMPLE. Now I was hoping to have someone tell me the details about Schwab. I've had a bad experience taking advise from Vanguard on a previous transfer, and want to make sure I get this one right with Schwab. I will call Schwab back multiple time til I get the same advise from what sounds like competent retirement account specialists.
When you talk to Schwab, ask about a "transfer" SIMPLE IRA if they don't recognize the term "frozen SIMPLE IRA".

However, if your money actually is in a SIMPLE IRA and the two years have passed, I don't believe you need a frozen or transfer IRA. A plain IRA will do. But that may be correct for 530X and not correct for 530Y. I've forgotten some of the finer details.

!!! Also is possible that my financial adviser or employer doesn't have us in a 5304 or 5305, since none of us have ever filled one out?!?!?!
Bernard Madoff and others have shown us that anything is possible. I hope this is not the case for you.

When you look at your account on the internet, surely there is some kind of account name at the top. I don't mean your name, I mean the name of the account.

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: American Funds 401k Advise

Post by retiredjg » Sat Jun 23, 2018 10:48 am

If you have not found this thread, it might be helpful

viewtopic.php?t=163592

Kickstart
Posts: 30
Joined: Thu Jan 25, 2018 8:23 pm

Re: American Funds 401k Advise

Post by Kickstart » Sat Jun 23, 2018 11:22 am

retiredjg wrote:
Sat Jun 23, 2018 10:48 am
If you have not found this thread, it might be helpful

viewtopic.php?t=163592
Helps some, nice to see what others have actually found and physically done with their situations. I fully intend to keep my thread informed on the outcome.

As far as trying to find anything through my AF account or online outlining what type of form I'm in is not possible. Says just SIMPLE IRA on AF account page. Since the 5304 and 5305 are only for the employer to keep and not turn into the IRS or others, I don't know why it would be documented anywhere on my actual IRA account.

retiredjg
Posts: 32903
Joined: Thu Jan 10, 2008 12:56 pm

Re: American Funds 401k Advise

Post by retiredjg » Sat Jun 23, 2018 11:35 am

I think it is encouraging to see the words SIMPLE IRA on an actual AF account. And to be able to see the account at all. It makes it seem more likely that your employer is just sloppy and the "advisor" is just sloppy instead of crooked.

Of course, I suppose someone could set up a dummy account and make it look real. If I were worried about that, I'd contact the corporate office using a phone number I found on the internet and ask some stupid question about my account....just to see if they can see it. For all we know, they could tell you if the plan is 5304 or 5305.

If you don't know this yet, the google box in the upper right will find previous threads on any subject. I tried frozen SIMPLE IRA and transfer SIMPLE IRA and found quite a number of threads you might find helpful.

Do keep us in the loop. It will be interesting to see how this works out.

retiredjg
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Re: American Funds 401k Advise

Post by retiredjg » Sat Jun 23, 2018 12:17 pm

Here's one other I found earlier and lost for awhile.

viewtopic.php?t=238472

Kickstart
Posts: 30
Joined: Thu Jan 25, 2018 8:23 pm

Re: American Funds 401k Advise

Post by Kickstart » Tue Jun 26, 2018 3:08 pm

Called Schwab again and now the advise is that because my employer chooses a 5305 with a DFI trustee/custodian, and it's been two years. Schwab wont allow me to open a SIMPLE IRA for monthly transfers from AF SIMPLE IRA. Schwab says I have to open a Traditional IRA instead because its been two years since investing with AF. Schwab also said that if AF transfers 12,500$ annually to a Schwab Traditional IRA that's okay. Plus I myself could probably still be allowed to invest another 5,500$ a year myself to the same Traditional IRA. Totaling 18,000k into a Traditional IRA annually. That doesn't sound right to me.

Advise previoiusly from Schwab was to use the employee group ID number from my employer DFI / American Funds and put that on the application for the employer group ID number on Schwabs new SIMPLE IRA application and that would funnel funds from the "master" (AF) to Schwab.

retiredjg
Posts: 32903
Joined: Thu Jan 10, 2008 12:56 pm

Re: American Funds 401k Advise

Post by retiredjg » Tue Jun 26, 2018 5:54 pm

Kickstart wrote:
Tue Jun 26, 2018 3:08 pm
Called Schwab again and now the advise is that because my employer chooses a 5305 with a DFI trustee/custodian, and it's been two years. Schwab wont allow me to open a SIMPLE IRA for monthly transfers from AF SIMPLE IRA. Schwab says I have to open a Traditional IRA instead because its been two years since investing with AF. Schwab also said that if AF transfers 12,500$ annually to a Schwab Traditional IRA that's okay. Plus I myself could probably still be allowed to invest another 5,500$ a year myself to the same Traditional IRA. Totaling 18,000k into a Traditional IRA annually. That doesn't sound right to me.
It is correct that you do not need a SIMPLE IRA. A traditional IRA will do since it has been 2 years since you made your first contribution to the plan.

Whether they CANNOT open a SIMPLE IRA for you or whether their policy is not to open a SIMPLE for you, I don't know.

Yes, you can transfer $12,500 annually from your other plan. You may have to do it by rollovers every ___ months.

Yes, you can also put $5,500 into tIRA each year but whether you should do so is unknown. In many cases, Roth IRA would be a better choice.
Advise previoiusly from Schwab was to use the employee group ID number from my employer DFI / American Funds and put that on the application for the employer group ID number on Schwabs new SIMPLE IRA application and that would funnel funds from the "master" (AF) to Schwab.
Maybe that is the correct instruction for a 5304 plan?

Anything new from your employer or the AF rep?

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