Who's doing individual SIMPLE IRA accounts?

[Guest Mac Lewis]

Can anyone tell me which of the mutual fund companies (if any) are offering SIMPLE IRA accounts to individual SIMPLE IRA participants where the plan has been established with another institution?

Thanks.

Mac

[Guest Steve Hample]

Dear Mac

Yes, this is easily done.

Let me be sure I understand the question: A company established a 5305 SIMPLE plan in which XYZ mutual funds were designated as the only recipient for contributions. One of the employees does not like XYZ funds and wishes to exercise his/her right to move such money to another fund company.

To do so, the employee normally invests in a no commission XYZ money market fund, perhaps paying a $10 IRA fee, but arranges an otherwise no cost direct transfer to another IRA custodian.

American Funds is one company that will accomodate that request. The employee should contact American funds for a SIMPLE IRA participant form and submit it with a transfer request form and a copy of the company's XYZ SIMPLE plan adoption agreement. American Funds is one of the oldest, largest fund families in the world and provides good service. Disclaimer: I am not attempting to act in a brokerage registered representative capacity; I am merely providing general, uncompensated, advice in my investment advisor capacity.

-Steve

[This message has been edited by Steve Hample (edited 04-27-99).]

[Guest Mac Lewis]

In fact the situation that prompted my question is one in which the SIMPLE was established with American Funds. Because American Funds acts as a "designated finacial institution," the participant's funds (invested with no sales charge in the money market account) can indeed be moved on by American Funds to a SIMPLE IRA account that the participant establishes at another institution -- if she is indeed able to do so.

However, she is having a hard time finding a fund group that she likes that will establish such an account, and she does want a no-load fund. She tells me that neither Janus or Fidelity will set up an individual SIMPLE account for her. I wonder who (other than American funds) will.

My only find so far is Resources Trust, which will set up an individual, self-directed SIMPLE IRA account for her and invest on her behalf wherever she chooses. It's not as simple as Steve thinks.

[Guest Steve Hample]

Hi Mac,

Hey, it was easy to answer your question. You just didn't like the answer! All I had to do was hit the speed dial button on my speaker phone and talk to the priority service team to get a good quick affirmative answer. That's one reason I often use American Funds for SIMPLEs.

Per your additional constraint, I called Vanguard and the service person said they would do it with no problem, but I did not feel comfortable with the response so you should double check it.

Sorry to be so long in responding; got burried with new clients. Feast time in the feast or famine cycle.

Steve

[Guest Steve Hample]

Mac,

One more thought - Franklin Templeton will also accept the request. They seem to have a very good legal department and will follow up on requests. They are a load fund and you get what you pay; more cost and better service. In my humble opinion your client should pay you a good hourly consulting fee for your time on hold to the no load funds or (my real recommendation) she should be happy with what she's got at American Funds and quit listening to the water cooler experts.

Steve

[This message has been edited by Steve Hample (edited 05-11-99).]

[This message has been edited by Steve Hample (edited 05-11-99).]