Forced IRA Rollovers - Who will take them?

[ljr]

Now that the new rules are upon us, I'm curious about what financial institutions are accepting these accounts. We amended our prototype at the sponsor level to drop the force out limit to $1,000 to avoid the problem but have received questions from clients who would like to take advantage of the rules to clear out amounts between $1,000 and $5,000 for lost participants.

[R. Butler]

We work with several vendors that do now or by the end of the year will take automatic rollovers from plans in which they serve as recordkeeper. They include American Funds, ING, Lincoln, Mass Mutual and Union Central. There could be 1 or 2 others that I am missing.

[david rigby]

BB&T will do so.

[mbozek]

Instead of going though the hassle/cost of complying with the mandatory rollover rules why not charge a fee directly to the accounts of terminated participants to defray the cost of administration or forfeit the accounts if the participant cant be located? Much simpler than direct rollovers and the plan benefits from the forfeitures.

[ljr]

M Bozek - good point and thanks! I think a concern is that if a forfeited lost participant should reappear, the plan has to pay them out from forfeitures if there is enough or the employer has to make a contribution if there is not.

[mbozek]

True but lost participants rarely ever reappear. Secondly the er gets the benefit of using forfeitures instead of E & P for contributions while waiting for the ee to reappear. The Q is how large are the accounts of the missing P? Also the plan need to have a provision to forfeit accounts of missing P.

[Guest M. Martin]

E*Trade is also accepting these rollovers