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Mandatory distributions blog posts
Automatically Moving Mandatory Distributions Forward
The mandatory distribution-to-Safe Harbor IRA plan feature as commonly utilized today was conceived in 2001 and launched in 2005 with good intentions, and for valid reasons. A mobile workforce, combined with a lack of retirement savings portability, had created a burgeoning problem for plan sponsors.
Safe Harbor IRAs Are Not Always Safe
Plan sponsors can help themselves and their participants over the long term by rolling balances of $5,000 or less from inactive participants into safe harbor IRAs. However, for various reasons discussed below, many safe harbor IRAs do not live up to their name and could leave sponsors with unexpected fiduciary liability.
How to Make Mandatory Distributions More Fiduciary Friendly
Mandatory distributions from employer-sponsored plans are a creation of regulation's specifically, a section of ERISA that allows plan sponsors to distribute accounts with less than $5,000 out of a qualified plan and into a safe harbor IRA.
Reduce Plan Fees by Increasing Account Balances
Plan costs can be lowered by increasing average balances, and average balances can be increased through auto portability, says RCH President & CEO Spencer Williams.
Why Dump Mandatory Distributions in a Landfill When You Can Recycle?
Mandatory distributions of small 401(k) accounts when participants separate from service provide many benefits for plan sponsors, including lower administrative costs and higher average account balances.
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