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Can existing grandfathered SARSEP Plan be moved to a new custodian?


Guest Andy C
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I have a client with a SARSEP plan established several years ago. They/I want to keep the SARSEP plan and implement a employer-funded SEP-IRA plan alongside it, but client is not happy with current SARSEP custodian, and investment choices.

Knowing that "new" SARSEP plans are "verboten," is client stuck with current custodian or can the plan and SARSEP-IRA balances be transferred to a new custodian with better/cheaper investment options for future contributions? Schwab or Vanguard is what I have in mind. Thanks for any insights!

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The plan can be transferred to another custodian. The restriction is on establishing new plan ( not new accounts). This will be a new account.

Just make sure the effective date of the plan is noted on the paperwork. Such date must on or before 12/31/96.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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The date the new SEP/SARSEP is signed (and IRAs established for eligible employees) is the date the provisions of the new agreement become effective. The 'grandfathered' agreement should of course be maintained in the employer's plan file. The original effective date is not usually asked for.

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The date is not requested on the IRS Form 5305-A. however, it is requested on most SEP prototype documents. In fact, one very large brokerage firm will not accept the document unless the initial effective date is on or before 12/31/96

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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