tag:blogger.com,1999:blog-23550078.post116255916603314867..comments2023-09-29T08:04:32.799-05:00Comments on makingourway: Jumping into assett allocation and the trouble with employer retirement accountsmakingourwayhttp://www.blogger.com/profile/13748811641577990850noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-23550078.post-1162630137596687882006-11-04T02:48:00.000-06:002006-11-04T02:48:00.000-06:00Hi;As far as I can determine, only two types of em...Hi;<BR/><BR/>As far as I can determine, only two types of employer provided plans allow in service transfers to a fiduciary of one's owm choosing, namely, a SIMPLE IRA and a 403(b) plan.<BR/><BR/>In the case of my employer plan, a SIMPLE IRA, I transfer assets annually (one could transfer assets more frequently, but once a year reduces the paperwork hassles and also reduces the risk of transfer errors.)<BR/><BR/>Because of penalty tax differentials during the first two years of a SIMPLE (25% percent penalty as opposed to the 10% Traditional IRA penalty) one can only execute trustee to trustee transfers between SIMPLE IRA's during the initial two year holding period. After two years, one can execute a trustee to trustee transfer to a Traditional IRA. <BR/><BR/>I execute these transfers to my Vanguard Traditiona IRA. The process is quite easy. I fill out a Vanguard Ira transfer request, noting in the margin that I am transferring a SIMPLE IRA. The transfer request allows me to direct the transfer to my chosen investment fund in my Traditional IRA. I also include a copy of my last quarterly statement from my employer plan. Upon receipt of my completed transfer request, Vanguard implements the transfer. One important reminder. Always select a no-load, no redemption fee fund within the employer plan; this reduces transaction costs.<BR/><BR/>A 403-b transfer is similar. Technically it is known as a 90-24 transfer. I helped a friend of mine transfer his 403b from a Variable Annuity account over to a Vanguard 403-b(7) last year. My friend, a school teacher, had finally, after nine years, reached the end of his insurance surrender fee period. We were thus in position to transfer virtually his entire balance (we left 500 dollars in the Annuity plan so that we could maintain our tenure and insure no surrender fees for subsequent annual trustee to trustee transfers). The transfer was similar to the SIMPLE transfer discussed above, except for the fact that we had to also fill out a form with the insurance annuity firm.<BR/><BR/>One should keep in mind that the IRS proposed regulations governing 403-b plans is scheduled to be implemented in 2008, and that the 90-24 transfer allowance is going to be disallowed under the revised regulations. So 403-b investors have only 2006 and 2007 to continue with transfer programs.<BR/><BR/>As for the common 401-k plan; in service transfers are not allowed; one can execute an iRA rollover only upon severence of employment with the employer.Anonymousnoreply@blogger.com