- Instructions
In order to comply with Department of Labor (DOL) requirements relative to advising on retirement plan assets, advisors are required to document their rationale for determining that a particular recommendation is in the client’s best interest if there exists a conflict of interest.
a)Recommendation: Rollover a Plan Account (e.g. 401(k)) to IRA.
Advisors are expect to consider all of the available options, including whether to: (1) leave the money in the former employer’s plan, if permitted; (2) roll over the assets to a new employer’s plan, if one is available and rollovers are permitted (not all employer plans accept rollovers); (3) roll over to an IRA; or (4) cash out the account value[1]. In addition, we must document why this recommendation is in the client’s best interest in light of fees, services and other factors set forth below. The term “Plan” shall have the meaning set forth in the firm’s DOL Fiduciary Duty Rule policy.
b)Recommendation: Rollover current IRA to new account (e.g. a new IRA or into a 401(k))
Advisors are expected to documentwhy this recommendation is in the client’s best interest in light of fees, services and other factors set forth below.
The following should be completed whenever an individual, client or prospect is specifically advised to roll funds out of his/her retirement plan and into an IRA, or to roll funds out of his/her current IRA account and into a new IRA account, regardless of whether the firm has been formally engaged or receives any compensation relative to such accounts.
- ERISA AR Form
Background Information:
a)Team Name:d)Client’s Age: [2]
b)Client Name:e)Client ID #:
c)What transaction is being recommended?
Plan Account (e.g. 401(k)) rollover to an IRA
IRA account rollover to a new account
Current Retirement Plan/IRA Account Information:
a)Current Acct. Name:
b)Current Acct. Number:
c)Current Market Value of Account: $
d)Do you currently bill on the market value of this account on the same
fee schedule as Client’s other account(s)?YesNo
If “Yes”,you do not need to complete the remainder of this Form and certify, by signing below, that this transaction is in the client’s best interest.Attach Client’s Engagement Agreement Schedule A, Client’s last invoice orevidence of these practices.
e)Is Client currently employed with the company associated with the
above-referenced Plan Account?YesNoN/A
f)Current Investment Expense Ratio (net of expenses paid by employer): $
g)Does client receive any advisory services from employer or the Plan?YesNoN/A
If “Yes”, describe the services received:
h)Does the Plan account hold employer stock that will be
transferred in-kind to the IRA account?YesNoN/A
If “Yes”, describe the tax implications of this transfer and how
thosetax implications will be mitigated:
Proposed Rollover Information:
a)Proposed Investments’ Expense Ratio: $
b)The following services will be provided to client with respect to his/her
IRA (select all that apply):
Investment AdviceDistribution Advice
Tax AdviceEstate Advice
Other:
c)Is the following an accurate representation of the circumstances surrounding this recommendation?
The investments available to Client following the rollover will consist of investments comprising firm’s Recommended List of securities. Investments available within the new IRA account are not otherwise available to Client through Client’s current account. In addition, the rollover will allow the firm to build a diversified portfolio of investments designed to provide reasonable returns when compared to appropriate peer groups while maintaining prudent levels of risk.After taking into consideration the individual’s overall financial position, investment goals, risk tolerance and retirement horizon, in conjunction with the limits on the available investment options, the firm has concluded that retaining funds within the current account will limitthe firm’s ability to create a portfolio for Client that is consistent with the firm’s investment philosophy.
Yes, this is accurate. No, this is not accurate.
If “No”, describe how the investments available in the new account will differ from those available in the current account, and to what extentwill the investments available in the new account be more beneficial to Client, if at all:
d)Please complete only for Plan Account rollovers to IRAs. Discuss the alternate options available to Client (see Instructions above) and why they are less suitable than a rollover:
e)Provide any further explanation as may be necessary to describe why the rollover is in the Client’s best interest (or attach documents or other materials that contain this information):
The undersigned Partner certifies that the above information, and any attached documents,are true and correct, and contain no material misstatements.
PARTNER
By:
Name:
Date:
FOR COMPLIANCE USE:Received By:
By:
Name:
Date:
[1]Taking a lump sum distribution that is not rolled over into another plan or an IRA may be costly for many individuals under the age of 59½. In general, tax penalties will apply if the employee is below age 59½ and the distribution will be taxed as ordinary income.
[2] If a client is between age 55 and 59½, keep in mind that many employer plans will allow penalty-free withdrawals, while traditional IRA withdrawals during this period are usually subject to a 10% early withdrawal penalty. In addition, Clients that are still employed after age 70½ can usually postpone taking required minimum distributions (RMD) from his/her current employer’s plan until they terminate employment, while IRAs have no similar provision for delaying RMD.