Dividend Reinvestment Program (Drip) in qualified plan

[Hoard1]

Does anyone know if a 401(k) can have direct investments in Drips as a plan investment.

I spoke with one person who said the transfer agent probably would not allow the investment to be held in the name of a qualified plan becaue they would not want to be construed as a trustee.

Any thoughts?

[Guest jkirschbaum]

It would certainly be legal for a plan to offer stock through a DRIP. I can't imagine why a transfer agent could be construed as a trustee - if that were the case it would be so with any tranfer agent for any type of stock, including employer stock that is ever an investment option in a plan.

I guess unless you also offer the 404© options you'll want to consider the fiduciary aspects of offering individual stock investments (or even if you do include the 404© options).

The Drips typically seem to have fairly low maximums that can be purchased in any one year - that might present a problem (unless the Drip is willing to treat each account separately.