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5304 or 5305....


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My question has to do with the the fact that the 5304 states..."Not for Use With a Designated Financial Institution" Ahhh.. what is a "Financial Institution" ??

Is the Financial Institution a specific family of funds like American or Vanguard? Or is the Financial Institution the firm that the financial advisor works for?

I take it to be the financial advisor's firm... but I want to be spot on correct!! How do others interpret that statement?

Im leaning toward telling this FA to use 5305-SIMPLE

Thanks

Its not easy being green

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Are you saying that when a 5304 is used the plan sponsor says to each eligible participant that they are on their own to find a financial institution who will setup the SIMPLE IRA account for them self to receive their contributions?

At the bottom of page 2 of the 5305 is where the financial institution is listed. The financial institution listed agrees to be responsible for accepting the contributions from the plan sponsor and depositing them into the appropriate participant account. I see that as the FA's firm. Agree?

Its not easy being green

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Are you married to the FA or something? The FA does not touch any funds unless the FA is a custodian and there is no reason for that. The money goes from the employer's payroll to the IRA that is set up and designated by the employee to the employer. Under a 5305, the employer chooses an IRA provider, sets up the IRAs for each eligible employee with the provider, and the deferred amounts are sent to the provider with instructions about the amounts to be credited to the various employees' IRAs.

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Not married to the FA at all... just want to make sure I use the correct form. I understand the FA doesn't touch the money. Money will be sent to the custodian and then allocated/deposited into each participant's account directly. Not passing through anything. The FA will guide each participant individually with investment advice... nothing more.

The plan sponsor will require that each participant IRA must be opened through 1 specific custodian therefore a form 5305 will be used. The custodian accepts the IRS form which makes it all good.

Its not easy being green

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