Rollover tip sheet: What advisers should consider

Should your client roll over a workplace retirement plan to an individual retirement account? Here's a guide to help decide

Dec 1, 2018 @ 6:00 am

By Mark Schoeff Jr.

Just as location, location, location is often said to be the key to good real estate, rollover recommendations have their own mantra: document, document, document.

Here are some factors, based on checklists used by advisers and suggested by legal experts, to consider when deciding whether or not to recommend a client roll their workplace retirement plan into an IRA.

Fees: What are the fees in the 401(k)? What will they be in the IRA? Importantly, evaluate the fee that the adviser will charge, which is not a cost that was associated with the company plan.

Total annual expenses: Does the employer pay the plan's administrative expenses?

(More: One thing advisers get wrong on retirement plan rollovers)

Investment advice: How comprehensive was the investment advice from the employer program? Will the adviser provide a wider array of services, such as financial planning?

Investment choices: Is there more breadth and depth to the company plan or the proposed IRA?

Asset allocation: Does one plan make it easier to change allocations as the market dictates?

Situational assessment: How old is the client? What makes the most sense for her to do at this point in her career/life?

Once the options have been parsed:

• Explain to the client why a rollover is or is not in her best interest.

• Write down the factors weighed.

• Give a copy of the recommendation to the client and file a copy for yourself.

Advisers will need to demonstrate their reasoning about why they chose to move retirement funds if questioned down the road — either by regulators or by upset clients in a market downturn.


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