Participant Fee Disclosure

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SCSurf
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Participant Fee Disclosure

Post by SCSurf » Wed Oct 11, 2017 7:40 am

I have a small business with a 401k and one of my ex-employees is trying to rollover hers into an IRA. Her client rep at Edward Jones keeps telling her that they need a participant fee disclosure from MY retirement custodian. They say it is required by law. I understand that Edward Jones must give her a fee disclosure form but why are they asking for one from me. They claim they are going to send her rollover check back to me. I know many of you have personal accounts but I figured many of you have done rollovers. Has anyone had to get this form from a former employer to open a new account.

KSActuary
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Re: Participant Fee Disclosure

Post by KSActuary » Wed Oct 11, 2017 9:36 am

Edward Jones may be requesting your Participant Fee Disclosure so that they can prove that they are acting in the client's Best Interests by rolling the money from the IRA to a brokerage account. The new DOL rules require that IRA rollovers be for the benefit of the participant and the broker/advisor must prove that they are either cheaper or have a better selection of funds.

SCSurf
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Re: Participant Fee Disclosure

Post by SCSurf » Wed Oct 11, 2017 11:06 am

Would this DOL law even apply, since she is no longer an employee.

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neurosphere
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Re: Participant Fee Disclosure

Post by neurosphere » Wed Oct 11, 2017 2:55 pm

SCSurf wrote:
Wed Oct 11, 2017 11:06 am
Would this DOL law even apply, since she is no longer an employee.
I can only guess that because she still has assets in the 401k, that most laws which pertain to 401ks still apply. In general, the fact that she is no longer an employee means that 1) she cannot make additional employer contributions (obviously, because she no longer is on the payroll and you are no longer her employer) and 2) depending on the plan rules she can be forced to remove/withdraw/rollover her funds if her balance is below a threshold, which is set by the plan. But general 401k rules and protections exist as long as she has funds in this 401k, regardless of her employment status.

Note I have no idea of the detail of any such DOL law regarding the fee disclosure. Just making a general comment.

Curious: does your plan allow her to keep her 401k assets with you? Depending on the 401k, it might be far better for her than rolling it over to an IRA with Edward Jones! :annoyed Not that you should be giving her any such advice, unless you are otherwise very tight with this person (e.g. a spouse).
-- Real name: Sotirios Keros. If you have to ask "Is a Target Retirement fund right for me?", the answer is yes.

KSActuary
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Re: Participant Fee Disclosure

Post by KSActuary » Wed Oct 11, 2017 3:25 pm

The new DOL rule applies to brokers and advisors and their interaction with asset management including 401k plans. The new DOL rule would state that the participant should leave the money in the 401k plan unless the advisor/broker can show reason that it is better outside of the plan in an IRA. Former employees with vested balances is exactly what this part of the is targeting as many 401k plans are cheaper than IRA accounts in terms of asset expense and advisement.

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ruralavalon
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Re: Participant Fee Disclosure

Post by ruralavalon » Thu Oct 12, 2017 8:56 am

KSActuary wrote:
Wed Oct 11, 2017 3:25 pm
The new DOL rule applies to brokers and advisors and their interaction with asset management including 401k plans. The new DOL rule would state that the participant should leave the money in the 401k plan unless the advisor/broker can show reason that it is better outside of the plan in an IRA. Former employees with vested balances is exactly what this part of the is targeting as many 401k plans are cheaper than IRA accounts in terms of asset expense and advisement.
This is probably the reason Edward Jones wants the 401k fee information.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

inbox788
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Re: Participant Fee Disclosure

Post by inbox788 » Thu Oct 12, 2017 4:04 pm

Is this type of information what the ex-employee is looking for?
What needs to be disclosed: Generally, two broad types of information: (1) plan information, including administrative and individual expenses that may be charged against an individual's account; and (2) investment-related information for the plan's designated investment alternatives. Additional information must be available upon request. Self-directed brokerage accounts were excluded from the regulations for investment-related information.
https://www.fidelity.com/retirement-ira ... ns-summary

Aren't you already providing it? Or more specifically your plan provider? I would expect most plans have boilerplate forms with this information. Aside from having to deal with an administrative request, what are you concerned about?

https://www.employeefiduciary.com/sampl ... mparisons/

And the requirements may have been changed a bit recently:
http://www.investopedia.com/updates/dol-fiduciary-rule/

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