No. of Recommendations: 0
Hi folks,

My husband is employed by a very small company which will be offering a SIMPLE IRA plan starting in January.

The employer (who is basically clueless about investing) wants to set up the employees' accounts with full service broker Edward Jones (ugh!), probably because their office is across the street. When my husband met with an EJ rep last week, he found that the choice of funds was horrible and the fees were outrageous.

In a previous thread on this board, I read that employees have a choice of where to keep their SIMPLEs. Can anyone tell me more about this? If we want to set up the SIMPLE at Vanguard for example, does the employer have to go along with our choice and still provide matching funds? Also, is it possible to read IRS publication 590 online, and if so, does anyone have a link?

Thanks very much,
RW
Print the post Back To Top
No. of Recommendations: 0
In a previous thread on this board, I read that employees have a choice of where to keep their SIMPLEs. Can anyone tell me more about this? If we want to set up the SIMPLE at Vanguard for example, does the employer have to go along with our choice and still provide matching funds?

Here's what I learned when looking into this for my husband a few months ago. The employee can setup an account with his choice of trustees, however the employer does not have to agree to deposit directly to that account. In that case you would have to move the funds in a transfer after they were deposited into the employers trustee account - you would have to see how much in fees this would cost - might be better to just use the employers choice if they won't contributed to your choice of accounts.
When we were looking, Vanguard didn't offer SIMPLE - might verify this now. We went with American Century, and the employer does make contributions to it.
Good luck-
Pam


Print the post Back To Top
No. of Recommendations: 0
Thanks, Pam.

I found out some more stuff by reading the relevant IRS publications (#590 and 560) and looking at the forms typically filed by the employer setting up the SIMPLE (form 5304-SIMPLE or 5305-SIMPLE).

Apparently if the employer uses 5304, employees have their choice of financial institution. If the employer uses 5305, there will be a designated financial instition that will receive contributions.

BUT: there is a provision in form 5305 which states that designated financial institution must agree to transfer funds to another IRA (I assume another SIMPLE, if it is within the initial 2-year period?) without cost or penalty, if the employee so desires. I am going to talk to the evil Edward Jones rep this afternoon and try to discern whether he can charge any fees at all if we decide to transfer all funds to a T. Rowe Price or other account immediately upon receipt.

Any other info/experience much appreciated!

RW
Print the post Back To Top
No. of Recommendations: 0
I know a little bit about Edward Jones. What about their fees did you find sooooo expensive?
Print the post Back To Top
Advertisement