Automatic Rollovers

[Guest Kevin Wiggins]

Does anyone know of any financial institutions that are thinking of taking the automatic rollovers?

[FundeK]

Does my checking account count??

I would think that financial institutions that have a retirement plan product would accept automatic rollovers from the plans the recordkeep for, and therefore should or could also accept automatic rollovers from other retirement plan providers.

Of course that doesn't necessecarily answer your question does it?

[Harwood]

http://www.penchecks.com/missing_participant.htm

[mbozek]

I dont know how financial institutions can make money on such accounts since the fees cannot exceed the income earned on the account and the investment is not supposed to risk principal. Money market funds are paying 40-60 basis pts. The plan can retain accounts of terminated employees and charge the account for the cost of maintaining the account without charging the accounts of active participants.

[Guest halka]

Mbozek is absolutely correct. The regulations virtually guarantee the mandatory rollovers are a money losing proposition and, therefore, encourage sponsors to keep all $1000+ balances in the plan. Maybe the sponsor could “subsidize” the rollover trustee’s fees, but what’s the incentive to do so? I do have the following Question:

If the Plan Sponsor or the IRA trustee invest in something other than the “safe harbor savings accounts,” does the account “income” cap on fees include “total return” or only “traditional trust accounting income” (dividends & interest)??