Employer plan at Ed Jones

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Mm8719
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Joined: Sat Jan 12, 2019 1:21 pm

Employer plan at Ed Jones

Post by Mm8719 » Sat Jan 12, 2019 1:48 pm

About a year ago I left my prior employer (very large corporation) to join a small family run organization. The switch has been a blessing for me and my family, although there is one issue that is a bit of a negative. My new employer has a Simple IRA plan through Edward Jones.

When I left my prior employer, I rolled over my traditional and Roth into Vanguard (after reading up on here). However, since my employer offers a 3 % match (no max) through the employer sponsored plan at EJ, of course I want to take advantage of that. I've been investing exactly 3% just to get the match. When I switched over I had a few long conversations with the advisor at Edward Jones. He recommended about 5 funds, mostly American Funds from large caps to smalls caps and a small amount in a bond fund. Of course they all have higher expense ratios, but from what I can tell they don't have front load fees. He claims these are the best options for me at my age (32). I let him know that id really prefer to be in a Vanguard fund. He said the only fund they had access to for Vanguard was the S&P 500 ETF, but there was a $5k minimum. Of course since I was just opening the account (and did not want to rollover anything due to their 1.25% managing fee) I didn't have that minimum amount. So I told him I'd give him a year with his recommendations and then most likely switch once my account was over that 5k minimum. There's now over 10k in that account (even though his options have shown a negative return) and it's been a year, so I'll be calling him this week.

Before I make the call I wanted to get some advice from you guys. First, do you guys know if I have the option of having my employer match into an account of my choosing? It is our understanding that since the simple is set at EJ, I have to invest there in order to get the match, but I just want to make sure I'm not missing anything? And since it appears I most likely do have to stay there, what would you guys recommend I tell the advisor to invest in? I asked for a list of all funds they have, but he told me it was too many to send. He said I could narrow it down and he'd send me a list. Of course like I said above, I ended up just telling me I'd go with his recommendation for a year so I never pushed any further for a list. At that time I was starting a new job, just had a new baby, I didn't have time to keep going back and forth with him. The only option I know they definitely have is the Vanguard S&P 500 ETF. Would it be wise to just go 100 percent in that for now? Surely thatd be better than his high expense American funds ?

Sorry for the long post, but any advice you guys can give me would be appreciated. Thanks

sport
Posts: 7657
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Employer plan at Ed Jones

Post by sport » Sat Jan 12, 2019 2:56 pm

Is there an ability to transfer money from your simple IRA to another IRA of your choice, perhaps once a year? If so, you could just use the least expensive fund, and it would never have too much in it.

krow36
Posts: 2028
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Employer plan at Ed Jones

Post by krow36 » Sat Jan 12, 2019 3:03 pm

A SIMPLE IRA does have options for using a financial institution (FI) other than that chosen by your employer. If the employer is using a Form 5304 SIMPLE IRA, you are allowed to choose your own FI. Your employer would establish an account with Vanguard for instance, and the contributions would go directly to Vanguard.

If on the other hand your employer is using a Form 5305, you are allowed to set up a "transfer" account (also called a "frozen" account by Vanguard). You would then be able to make trustee to trustee transfers of your money from your EJ SIMPLE to your frozen SIMPLE at Vanguard. Two years after your first EJ contribution, you can transfer out to a traditional IRA rather than to the transfer SIMPLE account. If you search "transfer" or "frozen" SIMPLE IRA, you'll find lots of threads on this. Also check out the BH Wiki.

retiredjg
Posts: 34791
Joined: Thu Jan 10, 2008 12:56 pm

Re: Employer plan at Ed Jones

Post by retiredjg » Sat Jan 12, 2019 3:07 pm

The answer to your questions will depend on what type of SIMPLE IRA you have. Is it a 5304 or a 5305? This is the first thing you need to know and it will determine what you do from here. Your employer may be clueless and your Edward Jones rep may be clueless as well, but keep hammering away til you find this out. It could even be on your plan paperwork which your employer is required to give you each year.

Regardless of which one it is, once your SIMPLE is 2 years old, you can transfer it out to an IRA of your choice. But again, how that happens depend on whether it is s 5304 or 5305 plan.

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Employer plan at Ed Jones

Post by livesoft » Sat Jan 12, 2019 3:12 pm

Mm8719 wrote:
Sat Jan 12, 2019 1:48 pm
There's now over 10k in that account (even though his options have shown a negative return) and it's been a year, so I'll be calling him this week.
A couple things:

1. Everything had a negative return in 2018, so that's not necessarily a way to make a comparison. I think if you try to use that as an excuse, then ....

2. Be careful with multiple funds in this account since EJ seems to charge an exit fee for each fund when you want to leave. It would be best to pick a single fund and adjust the AA of your other accounts to get your portfolio to your overall AA. Move all your EJ funds into one single fund soonest.
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acunn
Posts: 159
Joined: Tue Mar 10, 2015 4:29 pm

Re: Employer plan at Ed Jones

Post by acunn » Sat Jan 12, 2019 8:03 pm

The above posters helped me with this exact situation a few years back. (Thank you all again by the way!!!). 5304 used by this very small company that allowed me to open up the Simple at Vanguard for the company and be responsible for sending the deposits in on their behalf. Checks are made out to Vanguard directly of course. I was the only employee interested in managing my own funds while the rest are happy to let the EJ rep direct them. Opening was very easy so if they are using 5304 Simple you are allowed to choose. If the person keeping the books is hesitant due to the work load then offer to help. If I can do it, you can.

Prior to successfully opening the Vanguard account I was making transfers into my established Vanguard Rollover IRA. This worked for a while since the account met the required 2 years for transfers. Then the EJ guy told me I could no longer do that with the "new rules" when they changed to the guided solutions. That prompted me to force the issue of choosing my own vendor and it has been such a relief.

Good luck! If you choose Vanguard here is the link I hope to the Simple IRA Employer kit:

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

krow36
Posts: 2028
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Employer plan at Ed Jones

Post by krow36 » Sun Jan 13, 2019 1:28 pm

Mm8719 wrote:
Sat Jan 12, 2019 1:48 pm
The only option I know they definitely have is the Vanguard S&P 500 ETF. Would it be wise to just go 100 percent in that for now? Surely thatd be better than his high expense American funds ?
If you are staying at EJ at least for the time being, then yes I think the Vanguard S&P 500 ETF would be a better choice than the 5 expensive AF funds. Do you and your wife contribute to IRAs at a low-cost provider? It would be a good idea if possible to do so after contributing the 3% to your SIMPLE IRA. Then if further retirement contributions are possible, max out the SIMPLE IRA. Most of us here (but not all) believe that your asset allocation (stock/bond ratio) should include at least 20% bonds. You could put your bond funds in your IRAs. What is EJ using for your asset allocation?

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