Vanguard Individual 401K Rollovers

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SuperDave
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Vanguard Individual 401K Rollovers

Post by SuperDave » Thu Nov 06, 2014 1:21 pm

Just got off the phone with Vanguard rep - he told me that the Vanguard Individual/Solo 401K does not accept rollovers? I have a Rollover (traditional) IRA that I would like to roll into my Individual 401K.

I am reading the 401(K) Basic Plan Document, page 36 covers rollover contributions, first line:

"Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408....

?

retiredjg
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Thu Nov 06, 2014 1:31 pm

If you want to roll an IRA into a Solo 401k, check out Fidelity. They allow this. Apparently Vanguard does not (or so it has been reported by many). If you use the Fidelity Spartan Funds or the Fidelity Freedom Index Funds, then Fidelity is just as good a choice as Vanguard. And some people seem to like it better.

I'd say something has been "otherwise elected in the Adoption Agreement" for Vanguard's Solo 401k.

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Re: Vanguard Individual 401K Rollovers

Post by JDDS » Thu Nov 06, 2014 2:55 pm

SuperDave wrote:Just got off the phone with Vanguard rep - he told me that the Vanguard Individual/Solo 401K does not accept rollovers? I have a Rollover (traditional) IRA that I would like to roll into my Individual 401K.

I am reading the 401(K) Basic Plan Document, page 36 covers rollover contributions, first line:

"Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408....

?
Yeah, some others recently noted that language in another thread: http://www.bogleheads.org/forum/viewtop ... 2&t=132675

This is an updated plan doc. I'm unclear if the old one explicitly allowed it and they just refused, or if now that's the case or...

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Thu Nov 06, 2014 8:18 pm

SuperDave wrote:Just got off the phone with Vanguard rep - he told me that the Vanguard Individual/Solo 401K does not accept rollovers? I have a Rollover (traditional) IRA that I would like to roll into my Individual 401K.

I am reading the 401(K) Basic Plan Document, page 36 covers rollover contributions, first line:

"Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408....

?
You should press them on that. Escalate to the highest level. Maybe it used to not accept but it does now and the rep didn't have the latest info.
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micamica
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Re: Vanguard Individual 401K Rollovers

Post by micamica » Fri Nov 07, 2014 4:06 pm

Not quite answering your specific question, but I was wondering why would you want to roll an IRA into your Solo 401k -- why not roll into an IRA (at Vanguard)? You'd have more flexibility with that structure, and down the road you could roll assets from your 401k into the IRA without any trouble.

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Re: Vanguard Individual 401K Rollovers

Post by ERISA Stone » Fri Nov 07, 2014 4:08 pm

micamica wrote:Not quite answering your specific question, but I was wondering why would you want to roll an IRA into your Solo 401k -- why not roll into an IRA (at Vanguard)? You'd have more flexibility with that structure, and down the road you could roll assets from your 401k into the IRA without any trouble.
Back door Roth IRA contribution.

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SuperDave
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Re: Vanguard Individual 401K Rollovers

Post by SuperDave » Sun Nov 09, 2014 3:39 pm

ERISA is correct, I want to do this before a backdoor roth contribution (all accounts already at Vanguard).

So has anyone successfully done this at Vanguard or is it not allowed even though the actual plan seems to say otherwise (tfb?)?

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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 09, 2014 3:47 pm

We know they have not allowed this in the past - this has been reported by many people. Did you call Vanguard and ask them if there might have been a change very recently? I suspect not, but tfb is correct - you should mention the recent revision of the plan document and ask them if this might have been changed.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Sun Nov 09, 2014 5:52 pm

SuperDave wrote:So has anyone successfully done this at Vanguard or is it not allowed even though the actual plan seems to say otherwise (tfb?)?
It used to not allow. I don't have the old plan document. Maybe someone has and can compare. The plain reading of the new plan document says it allows. The burden is on them to explain to you why you can't do it (if that's the case). It would be a violation of ERISA to operate the plan against the plan document.
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 09, 2014 8:26 pm

Yes, but....that is a basic plan document that could cover a lot of different types of plans. The Adoption Agreement which is specific for solo 401k plans may disallow this for solo 401k plans. I think you should do what tfb suggested and I agree the burden is on them, but don't get your hopes up.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Mon Nov 10, 2014 10:31 am

retiredjg wrote:Yes, but....that is a basic plan document that could cover a lot of different types of plans. The Adoption Agreement which is specific for solo 401k plans may disallow this for solo 401k plans.
I looked at the Adoption Agreement. I don't see anything explicitly excluding rollover contributions. By the plan document, unless explicitly excluded, the plan has to accept rollover contributions from IRAs (distributions made from plans described in Code section 408).
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Mon Nov 10, 2014 10:48 am

That's interesting. But wouldn't the Adoption Agreement be specific to a certain plan? Might the Adoption Agreement for a Solo be different from the Adoption Agreement for a regular 401k?

If the plan really is changed, that will make a lot of people happy. And it is entirely possible that every phone rep has not gotten the message about changes. I guess we'll see when/if the poster gets back in touch with Vanguard.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Mon Nov 10, 2014 11:19 am

retiredjg wrote:That's interesting. But wouldn't the Adoption Agreement be specific to a certain plan? Might the Adoption Agreement for a Solo be different from the Adoption Agreement for a regular 401k?
The Adoption Agreement is included in the solo plan document package here:

https://personal.vanguard.com/us/Litera ... dorID=S571

It has some options you can turn on or off but nothing to exclude rollover contributions. Whether it's different from the Adoption Agreement for a regular 401k doesn't matter. The one in this package is the one that governs.
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Mon Nov 10, 2014 4:10 pm

You are making a great argument and I hope it has changed. We can always hope!

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Re: Vanguard Individual 401K Rollovers

Post by placeholder » Tue Nov 11, 2014 1:56 am

Of course it matters little whether anyone here agrees or not it's whether Vanguard does.

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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Tue Nov 11, 2014 8:34 am

Of course. But if we keep talking about it long enough, someone who is really persistent will call and get the scoop. :D

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Re: Vanguard Individual 401K Rollovers

Post by SuperDave » Sun Nov 16, 2014 11:21 am

So below is the standard response, with no discussion of the specific line in the plan that I cited.
I guess I would be interested in if this really is a violation of ERISA.


I was able to get more information pertaining to your question with the
help of my colleagues that work in our Retirement team.

Qualified plans can, but are not required, to permit rollover
contributions. If rollover contributions are permitted, such amounts must
be accounted for separately from other types of contributions to the plan.
Depending on the plan terms, rollover contributions may not be subject to
the same distribution or withdrawal restrictions as other types of
contributions. Due to the extra costs that would stem from the additional
recordkeeping requirements, rollover contributions are not currently
accepted to the Vanguard Individual 401(k) Plan.

If you have additional questions, our Retirement area can be contacted at
800-376-9162. You can reach that division on business days from 8 a.m. to 8
p.m. and on Saturdays from 9 a.m. to 4 p.m., Eastern time. As always, my
contact information is below and I encourage you to reach out should you
have any additional questions for me. Thanks again and have a great
weekend.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Sun Nov 16, 2014 11:49 am

Tell them to make sure this is their final answer from their compliance department before you send their reply and the plan document and adoption agreement to the IRS and DOL. The IRS contact is in the determination letter included in the new plan document kit.

The IRS said this about not operating the plan according to its terms:

401(k) Plan Fix-It Guide - You didn't base the plan operations on the terms of the plan document
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 16, 2014 12:41 pm

SuperDave wrote:If you have additional questions, our Retirement area can be contacted at 800-376-9162.
This is closer to the horse's mouth so calling them is what I'd do. Put the burden on them to show you where it says "no rollovers" in the documents. Maybe it is there and has been overlooked. Or maybe they intended it to be there and something fell between the cracks.

Even if you are right and the documents are faulty, I feel sure they would just rewrite the document. That is what the IRS tells them to do, isn't it?

I'm just curious if anyone knows if this new document is actually any different from the old document(s). We all know what they intended to do in the past (no rollovers from IRA). What we really don't know is if they intended to change that or not.

I wonder if Vanguard is aware that they are losing Solo 401k accounts to Fidelity because of this inability to roll IRA funds in. Of course, they may know and it may not matter because they have run the numbers and decided not to do it based on that. In the big scheme of things, I guess Solo 401k plans are not that big a slice of their business.

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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 16, 2014 12:43 pm

Another question. Apparently they do allow rollovers from other 401k plans. Don't those also require separate accounting? I suppose the answer could be either yes or no. I'm just curious (if you should happen to talk to them again).

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Sun Nov 16, 2014 12:50 pm

retiredjg wrote:I'm just curious if anyone knows if this new document is actually any different from the old document(s).
Nobody saved the old document? Do we need a new thread to ask forum members?
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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 16, 2014 12:52 pm

tfb wrote:
retiredjg wrote:I'm just curious if anyone knows if this new document is actually any different from the old document(s).
Nobody saved the old document? Do we need a new thread to ask forum members?
I guess that depends on how interested you might be in finding out. I'm not interested enough to find it and read it, but if someone actually does go to the trouble of reading both documents, I'd be interested in the answer. :happy

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Sun Nov 16, 2014 12:59 pm

retiredjg wrote:
tfb wrote:
retiredjg wrote:I'm just curious if anyone knows if this new document is actually any different from the old document(s).
Nobody saved the old document? Do we need a new thread to ask forum members?
I guess that depends on how interested you might be in finding out. I'm not interested enough to find it and read it, but if someone actually does go to the trouble of reading both documents, I'd be interested in the answer. :happy
I will read. I just need the document. I don't have a Vanguard plan.
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Re: Vanguard Individual 401K Rollovers

Post by JDDS » Sun Nov 16, 2014 1:09 pm

tfb wrote:
retiredjg wrote:
tfb wrote:
retiredjg wrote:I'm just curious if anyone knows if this new document is actually any different from the old document(s).
Nobody saved the old document? Do we need a new thread to ask forum members?
I guess that depends on how interested you might be in finding out. I'm not interested enough to find it and read it, but if someone actually does go to the trouble of reading both documents, I'd be interested in the answer. :happy
I will read. I just need the document. I don't have a Vanguard plan.
I have a hard copy, but I don't think an electronic one.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Sun Nov 16, 2014 1:14 pm

JDDS wrote:I have a hard copy, but I don't think an electronic one.
Can you look for a section with the heading "ROLLOVER CONTRIBUTIONS"? Her's what the new doc says:
3.07 ROLLOVER CONTRIBUTIONS

Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect Rollover and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408, and 457(b) (if maintained by a governmental entity) (excluding Nondeductible Employee Contributions and Roth Elective Deferrals except as otherwise indicated in the Adoption Agreement) unless an Employee is either an Employee of a Related Employer of the Adopting Employer that does not participate in this Plan or a member of any excluded class in Adoption Agreement Section Two and Plan Section 2.01. The Plan Administrator may require the Employee to certify, either in writing or in any other form permitted under rules promulgated by the IRS and DOL, that the contribution qualifies as a rollover contribution under the applicable provisions of the Code. If it is later determined that all or part of a rollover contribution was ineligible to be contributed to the Plan, the Plan Administrator shall direct that any ineligible amounts, plus earnings or losses attributable thereto (determined in the manner described in Plan Section 7.02(B)), be distributed from the Plan to the Employee as soon as administratively feasible.
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Re: Vanguard Individual 401K Rollovers

Post by JamesSFO » Sun Nov 16, 2014 1:17 pm

JDDS wrote:
SuperDave wrote:Just got off the phone with Vanguard rep - he told me that the Vanguard Individual/Solo 401K does not accept rollovers? I have a Rollover (traditional) IRA that I would like to roll into my Individual 401K.

I am reading the 401(K) Basic Plan Document, page 36 covers rollover contributions, first line:

"Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408....

?
Yeah, some others recently noted that language in another thread: http://www.bogleheads.org/forum/viewtop ... 2&t=132675

This is an updated plan doc. I'm unclear if the old one explicitly allowed it and they just refused, or if now that's the case or...
Has the OP's plan been restated to use this document? It seems worth pushing on Vanguard a bit more on this. I would also strongly recommend email/writing so you are more clearly pointing to specific document sections like the one discussed in that thread rather than taking the answer from random phone representative. They random phone representatives DO get things wrong.

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Re: Vanguard Individual 401K Rollovers

Post by JDDS » Sun Nov 16, 2014 1:37 pm

tfb wrote:
JDDS wrote:I have a hard copy, but I don't think an electronic one.
Can you look for a section with the heading "ROLLOVER CONTRIBUTIONS"? Her's what the new doc says:
3.07 ROLLOVER CONTRIBUTIONS

Unless otherwise elected in the Adoption Agreement, an Employee may make Indirect Rollover and Direct Rollover contributions to the Plan from distributions made from plans described in Code sections 401(a), 403(a), 403(b), 408, and 457(b) (if maintained by a governmental entity) (excluding Nondeductible Employee Contributions and Roth Elective Deferrals except as otherwise indicated in the Adoption Agreement) unless an Employee is either an Employee of a Related Employer of the Adopting Employer that does not participate in this Plan or a member of any excluded class in Adoption Agreement Section Two and Plan Section 2.01. The Plan Administrator may require the Employee to certify, either in writing or in any other form permitted under rules promulgated by the IRS and DOL, that the contribution qualifies as a rollover contribution under the applicable provisions of the Code. If it is later determined that all or part of a rollover contribution was ineligible to be contributed to the Plan, the Plan Administrator shall direct that any ineligible amounts, plus earnings or losses attributable thereto (determined in the manner described in Plan Section 7.02(B)), be distributed from the Plan to the Employee as soon as administratively feasible.

I found the following on page 25, which looks like the same language to me. Sorry for the OCR errors:
3.07 ROLLOVER CONTRIBUTIONS
Unless otherwise Indicated in the Adoption Agreement, an Employee may make indirect Rollover and/or Direct Rollover contributions to the Plan from distributions made from plans described in Code Sections 401(a), 403(a), 403(b), 408, and 457(b) (if maintained by a governmental entity) (excluding Nondeductible Employee Contributions and Roth Elective Deferrals except as otherwise indicated in the Adoption Agreement! unless an Employee is either an Employee of a related employer that aoes not. participate in this Plan or a member of any excluded class in Adoption Agreement Section Two end Plan Section 2.01. The Plan Administrator may require the Employee to certify, either in writing or in any other form permitted under rules promulgated by the IRS and DOL, that trie contribution qualifies as a rollover contribution under the applicable provisions of the Code. If it is later determined that all or part of a rollover contribution was ineligible to be contributed to the Plan, the Plan Administrator shail direct that any ineligible amounts, plus earnings or losses attributable thereto (determined in the manner described in Plan Section 7.02(B)), be distributed from the Plan to the Employee as soon as administratively feasible.

A separate account shall be maintained by the Plan Administrator for each Employee's rollover contributions, which will be nonforfeitable at all times. Such account will share in the income and gains and losses of the Fund in the marine' described in Plan Section 7.02(B). Where the Adoption Agreement does not permit Employer designation with respect to rollover contributions, the Employer may, in a uniform ana nondiscriminatory manner, allow only Employees who have become Participants in the Plan to make rollover contributions.

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Re: Vanguard Individual 401K Rollovers

Post by retiredjg » Sun Nov 16, 2014 1:51 pm

retiredjg wrote:Another question. Apparently they do allow rollovers from other 401k plans. Don't those also require separate accounting? I suppose the answer could be either yes or no. I'm just curious (if you should happen to talk to them again).
Looking at both plans, the answer to this is yes.

So they are willing to accept the extra cost of separate accounting for 401k rollover contributions, but not IRA rollover contributions. I wonder why?

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Re: Vanguard Individual 401K Rollovers

Post by Rox » Mon Nov 17, 2014 10:44 am

I just wanted to share my experience as I went through similar issues recently:

I am a SE individual/Sole proprietor. I wanted a i401k that could:

1 - allow rollovers of other work plans
2 - allow rollovers of IRA's
3 - allow Roth style EE contributions
4 - allow After-Tax, Non-deductible contributions (note, this is different than 3, see "mega Roth" threads and Alan S's more recent post regarding the IRS's recent decision to relent to simpler accounting of this kind of move)
5 - allow in-service withdrawals
6 - allow purchase of Admiral share class of VG funds
7 - allow for a self directed brokerage account and all the stocks/ETFs/Other MF's I could possibly need
8 - allow loans of the $$$ in the 401k

I currently hold an "Individual 401(k)" with Vanguard that does ALL of this. There's a catch ...

The problem is that VG (and most other places that I researched) offers you a prototype plan document with a simplified Adoption Agreement. It is important to recognize these 2 things are separate entities. The plan wording that many people are quoting above can be found in virtually EVERY Plan Document that I have read (Etrade, Fidelity, VG, etc.). What differentiates the i401k offered by these particular companies is what the Adoption Agreement chooses to elect. Therefore, if the wording of the plan document states something like "the plan sponsor [Vanguard] may elect for Traditional IRA's Rollovers into the 401k plan" then you must look at the Adoption Agreement you sign with Vanguard. If that Adoption Agreement says "nothing" about those types of rollovers, then it is *not* allowed even though the plan document has stipulations stating it is possible. Ditto for Section [3.10] Nondeductible contributions, ditto for In-Service withdrawals, ditto for loans.

Why doesn't the VG prototype plan allow these things? Why does VG not allow Admiral class shares in their prototype plan? Who knows - probably the same reason Vanguard doesn't directly sponsor HSA's at this time. Ultimately, you can sidestep these issues.

You can achieve what you are looking for at Vanguard by bringing your own Adoption Agreement to Vanguard. On Vanguard's individual site, I noticed that the company Ascensus provides document services for Vanguard's prototype plan. I called this company and found out that they provide document services as well. For a nominal flat fee ($200) they "created my plan document" - they sent me a fully customizable Adoption Agreement that allowed me to elect for ALL these items that the VG prototype plan does not allow. Once I had this document, I went back to VG and applied for their "Small Business Plan Pooled Account" whereby VG is the Financial custodian. In this way, VG provides NO accounting of the different subaccounts in the 401k, NO document services for tax purposes (special form that has to be filed if assets are greater than around 250K), and no 1099-R's. I let my accountant do the tax forms, and he can also do the accounting of the subaccounts. I don't need the full services of a TPA because I'm just one guy.

VG holds the funds, I have a linked brokerage account with the plan. When I log into my personal VG page, I see my Roth IRA and my Old SEP-IRA and my Old-Traditional IRA along with my new "Plan" just as if it were another IRA account. I then perform an exchange from the SEP to the "Plan". I get the customary warning about "this is a disbursement, taxes - taxes - taxes" and I ignore this bc it's a Rollover. Just like doing a Roth conversion. I move all my Traditional style IRA accounts over to the "Plan" and I have full access to admiral shares, ETF's, stocks ... the whole deal. Vanguard charges $0 for this service. :happy

I hope this helps clarify the Plan Document vs Adoption Agreement issue ...

Rox

(Edited to correct plan section reference)
Last edited by Rox on Mon Nov 17, 2014 2:24 pm, edited 1 time in total.

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Re: Vanguard Individual 401K Rollovers

Post by tfb » Mon Nov 17, 2014 1:56 pm

Rox wrote:What differentiates the i401k offered by these particular companies is what the Adoption Agreement chooses to elect. Therefore, if the wording of the plan document states something like "the plan sponsor [Vanguard] may elect for Traditional IRA's Rollovers into the 401k plan" then you must look at the Adoption Agreement you sign with Vanguard. If that Adoption Agreement says "nothing" about those types of rollovers, then it is *not* allowed even though the plan document has stipulations stating it is possible. Ditto for Section [3.10] Nondeductible contributions, ditto for In-Service withdrawals, ditto for loans.
There are two types of language with regard to elections in the Adoption Agreement.

(1) "Unless otherwise elected in the Adoption Agreement" - This means if the Adoption Agreement says nothing, what follows is true. 3.07 rollover contributions fall into this bucket. There are many other stipulations like this. Just search for "unless otherwise" in the PDF.

(2) "If elected by the Employer in the Adoption Agreement" - This means if the Adoption Agreement says nothing, what follows is false. 3.10 nondeductible contributions fall into this bucket. There are also many other stipulations like this. Just search for "if elected" in the PDF.
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Re: Vanguard Individual 401K Rollovers

Post by Rox » Mon Nov 17, 2014 2:17 pm

tfb wrote:
Rox wrote:What differentiates the i401k offered by these particular companies is what the Adoption Agreement chooses to elect. Therefore, if the wording of the plan document states something like "the plan sponsor [Vanguard] may elect for Traditional IRA's Rollovers into the 401k plan" then you must look at the Adoption Agreement you sign with Vanguard. If that Adoption Agreement says "nothing" about those types of rollovers, then it is *not* allowed even though the plan document has stipulations stating it is possible. Ditto for Section [3.10] Nondeductible contributions, ditto for In-Service withdrawals, ditto for loans.
There are two types of language with regard to elections in the Adoption Agreement.

(1) "Unless otherwise elected in the Adoption Agreement" - This means if the Adoption Agreement says nothing, what follows is true. 3.07 rollover contributions fall into this bucket. There are many other stipulations like this. Just search for "unless otherwise" in the PDF.

(2) "If elected by the Employer in the Adoption Agreement" - This means if the Adoption Agreement says nothing, what follows is false. 3.10 nondeductible contributions fall into this bucket. There are also many other stipulations like this. Just search for "if elected" in the PDF.
tfb states my intention much clearer - ! Thanks (and for correcting my 3.10 reference) ...

Rox

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Re: Vanguard Individual 401K Rollovers

Post by kkhanmd » Mon Nov 17, 2014 3:04 pm

I was lucky enough to move my roll over vanguard IRA to my old 403b/401k at tia-cref. Call up your other plans and see if they will accept it?

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Re: Vanguard Individual 401K Rollovers

Post by Jtn001 » Thu Apr 02, 2015 5:07 pm

Rox wrote:I just wanted to share my experience as I went through similar issues recently:

I am a SE individual/Sole proprietor. I wanted a i401k that could:

1 - allow rollovers of other work plans
2 - allow rollovers of IRA's
3 - allow Roth style EE contributions
4 - allow After-Tax, Non-deductible contributions (note, this is different than 3, see "mega Roth" threads and Alan S's more recent post regarding the IRS's recent decision to relent to simpler accounting of this kind of move)
5 - allow in-service withdrawals
6 - allow purchase of Admiral share class of VG funds
7 - allow for a self directed brokerage account and all the stocks/ETFs/Other MF's I could possibly need
8 - allow loans of the $$$ in the 401k

I currently hold an "Individual 401(k)" with Vanguard that does ALL of this. There's a catch ...

The problem is that VG (and most other places that I researched) offers you a prototype plan document with a simplified Adoption Agreement. It is important to recognize these 2 things are separate entities. The plan wording that many people are quoting above can be found in virtually EVERY Plan Document that I have read (Etrade, Fidelity, VG, etc.). What differentiates the i401k offered by these particular companies is what the Adoption Agreement chooses to elect. Therefore, if the wording of the plan document states something like "the plan sponsor [Vanguard] may elect for Traditional IRA's Rollovers into the 401k plan" then you must look at the Adoption Agreement you sign with Vanguard. If that Adoption Agreement says "nothing" about those types of rollovers, then it is *not* allowed even though the plan document has stipulations stating it is possible. Ditto for Section [3.10] Nondeductible contributions, ditto for In-Service withdrawals, ditto for loans.

Why doesn't the VG prototype plan allow these things? Why does VG not allow Admiral class shares in their prototype plan? Who knows - probably the same reason Vanguard doesn't directly sponsor HSA's at this time. Ultimately, you can sidestep these issues.

You can achieve what you are looking for at Vanguard by bringing your own Adoption Agreement to Vanguard. On Vanguard's individual site, I noticed that the company Ascensus provides document services for Vanguard's prototype plan. I called this company and found out that they provide document services as well. For a nominal flat fee ($200) they "created my plan document" - they sent me a fully customizable Adoption Agreement that allowed me to elect for ALL these items that the VG prototype plan does not allow. Once I had this document, I went back to VG and applied for their "Small Business Plan Pooled Account" whereby VG is the Financial custodian. In this way, VG provides NO accounting of the different subaccounts in the 401k, NO document services for tax purposes (special form that has to be filed if assets are greater than around 250K), and no 1099-R's. I let my accountant do the tax forms, and he can also do the accounting of the subaccounts. I don't need the full services of a TPA because I'm just one guy.

VG holds the funds, I have a linked brokerage account with the plan. When I log into my personal VG page, I see my Roth IRA and my Old SEP-IRA and my Old-Traditional IRA along with my new "Plan" just as if it were another IRA account. I then perform an exchange from the SEP to the "Plan". I get the customary warning about "this is a disbursement, taxes - taxes - taxes" and I ignore this bc it's a Rollover. Just like doing a Roth conversion. I move all my Traditional style IRA accounts over to the "Plan" and I have full access to admiral shares, ETF's, stocks ... the whole deal. Vanguard charges $0 for this service. :happy

I hope this helps clarify the Plan Document vs Adoption Agreement issue ...

Rox

(Edited to correct plan section reference)
Rox, thank you for the great info. My current 401k at Schwab has a 3rd party administrator charging me 144/yr for basically doing nothing (got it from Costco referral). I do all tax and record keeping. I am trying to do the same and create a 401k like yours at vanguard and then move my existing 401k money from Schwab into it. Can you give me more details?
1. Which department should I talk to at ascensus?
2. What "package" document should I get? The basic plan documents (excluding the record keeping?)
3. Do I include this in the "pooled" vanguard application?
4. How did you find this unique option? And what is the "pooled" account?

Thanks!
Jim

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