Jump to content
sflaborrep

"transfer" Balance To New Account W/different Provider

Recommended Posts

I am writing with the hope that someone can weigh in on my concern. First, I work with an non-profit and am in the unique position of representing both myself and the employer as a benefits manager with the firm. The Hartford currently holds several hundred thousand dollars (for about ten employees four of which are retired,) pursuant to our deferred compensation 457b plan set in 1990.

 

Late last year, we as the employer had the plan document revised by counsel to reflect changes in the law since 1990 and for purposes of "porting" our accounts elswhere.

 

Frankly, the Hartford pretty much sucks, the management fees on the very limited and weak subaccount investment options that we have available to us are excessive (1.49% to 2.0% and ABOVE!)

 

Without the help of our current advisor (at that time who wanted us to have a similar arrangement for commission purposes I assume at John Hancock,) I learned that the Vanguard offers a "for benefit of" account whereby they will accept the bookeeper's payment on behalf of the employee pursuant to the plan document, we would be required to provide a third party administration of the plan to file the appropriate documents and perform all of the techinical and legal details.

 

Here's the kicker. The Hartford simply refuses to provide to me the form or mechanism for transfering the accounts. Every time I speak with someone about it it seems like they are working somewhere else when I call back. My third party assistant provied to me a very specific communication to initiate the process with the Hartford, and the Hartford simply responded by sending out withdrawl forms which required me to state either the I was terminated, resigned, retired, or there was an emergency! If I filled out the form sent to me I would have to pay the tax and the penalty right??? All I want to do is get away from them as an employee and as the employer and put the money somewhere that doesn't suck!

 

Today I called and the simply said it can't be done. I told that the IRS allows it, and asked them "what are you relying on to make your conclusion, what law, what code, what contract provision?" They simply state to me they can't help.

 

What a nightmare, can anyone out there please help me understand what I'm missing here?

 

Thanks!

Share this post


Link to post
Share on other sites

Why haven't you discussed this question with counsel for the plan since they can provide you with the advice you need?

 

In a NP 457b plan the employer owns the assets of the plan. Therefore the employer can cashout, sell or surrender the assets for cash at any time subject to the term of the funding instrument, e.g. ,annuity contract, LI policy, mutual fund, etc. Once the employer receives the $$ it can invest the funds in a new investment vehicle. There is no tax on the distribution of funds since the NP is the owner but there may be a surrender charge or deferred sales charge.

 

You need to review the terms of the plan with counsel to see what the procedures are for selling or cashing out an asset under the plan and whether the employee must give consent.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...