The end of FBO's???

[austin3515]

Will someone please tell me that not even the DOL would be this rash?? There is literally nowhere else for the small plans to go...

http://lawtonrpc.com/lrpcs-weekly-insight-brokerage-account-windows-shutting-in-401k-plans/

What is the likely outcome? Most experts think the DoL will:

• Establish fiduciary guidelines and limitations for offering brokerage account windows;

• Require more notices for plan participants who have access to brokerage account windows;

• Bar their use as the only investment option in a retirement plan; and

[BG5150]

Will someone please tell me that not even the DOL would be this rash?? There is literally nowhere else for the small plans to go...

Not true.

They can have these "brokerage accounts" but the Trustees limit the funds allowed in the accounts to a predetermined schedule of investments (a "fund menu").

[austin3515]

Great solution. As soon as brokerage account providers spend millions of dollars to revamp their software to provide for such limitations I promise to take it back. But I won't hold my breath. The Fidelity's and Schwabs and TD Ameritrades do not have that type of functionality. And as a general rule participants are given trading authority on the accounts because of course the Trustee would not want to be the one calling Fidelity to request trades.

[masteff]

Here's a more even toned article: http://www.investmentnews.com/article/20140122/FREE/140129965

[Bill Presson]

Great solution. As soon as brokerage account providers spend millions of dollars to revamp their software to provide for such limitations I promise to take it back. But I won't hold my breath. The Fidelity's and Schwabs and TD Ameritrades do not have that type of functionality. And as a general rule participants are given trading authority on the accounts because of course the Trustee would not want to be the one calling Fidelity to request trades.

Frankly it would be nice if someone required the brokerage account providers to actually revamp their software and make them play nice instead of always requiring the Relius/Omni/SRT/ASC/Datair crowd to do so.

[austin3515]

masteff, I have no problem if they want to do away with the windows inside a larger plan. Because they have a viable option available. It's the 5 person plan with $100,000 that I would worry about. I don't even know what I would tell them to do. Honestly, there is no alternative that is priced below say 2%. Does anyone disagree with that? Well I guess American Funds RKD, but then they have to pay for recordkeeping out of pocket.

[K2retire]

My former employer has an inexpensive bundled option for small plans. The trade off is that your document options are pretty seriously restricted and the client has to do a significant amount of the work. Send me a private message if you'd like to know more.

[Peter Gulia]

austin3515, the linked-to article mentions unnamed experts as the source of the idea that EBSA interpretations might make the use of securities accounts impractical. When I make a prediction about what a government agency will do, I stand behind it with my name.