IBM 401k

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Aug 19, 2010 6:43 am

I have a client who has a small 401k at IBM (20K). Its lost some money and she'd like to roll over what she has earned now to my firm while still contributing at IBM receiving the employer match. I believe it would be a non-hardship withdrawal. IS this possible while still being employed? Ive asked a few people and been told yes and no. Ultimately Ill  have to sit down with client and call the plan admin. to get answers but I thought Id give a try here first. Thanks in advance

Aug 19, 2010 10:08 am

Yes, IBM allows in-service non-hardship rollovers.  However, the rules can be different at each company regarding (1) how much can be rolled out, and (2) whether or not you are penalized by being frozen out of contributions for a period of time.

So, here's what you need to do: get the client in your office, call the plan providor TOGETHER and make sure you ask these questions:

1. HOW MUCH can be rolled out.

2. How do you calculate the amount that is eligible? (just for your own knowledge)  The customer service rep may not be able to answer this, they may just have a computer screen that tells them "this is how much is eligible".  Typically it is (a) prior plan rollovers that rolled into this plan, + (b) company contributions after a vesting period, + (c) any after-tax contributions.  But again, each plan is different.  And over-59.5, you can usually roll out employee contributions as well.

3. **IMPORTANT** Will doing this rollover prevent the client from contributing to her plan for any period of time after this is done?  If they say NO, confirm that back to them a second time, and make sure your client is listening.  Make a note of the reps NAME, and the date and time you called. 

I have done a LOT of in-service rollovers.  They go pretty smooth depending on the providor.  I do many through Fidelity and Hewitt.  As long as you are on the phone with client, Fidelity is not too bad.  Always tell the client in advance what to expect.  And download the "Special Tax Notice" in advance, or just tell your client to answer "yes" if they received it or not.  Otherwise that holds it up.

Jones has a list of about 150-200 companies that allow in-service rollovers.  It is mostly larger, Fortune-500 companies, but some smaller ones.  I am sure the lsit is not all-inclusive.

Let me know if you have any questions.

Aug 19, 2010 10:09 am

IBM is on the list of companies who will allow for in service withdrawals. 

You'll need to call HR to get more details.  There may be some strings attached to that withdrawal, like she doesn't get the company match for the year or she can't contribute for 6 months.  I've had both of those conversations.  Just make sure it's worth her trouble and yours for her to give up some benefits. 

Just a silly question, but is she thinking that if she rolls that money to you that she won't lose money any more? 

Aug 19, 2010 10:17 am

Have your client request a copy of the Summary Plan Description (SPD). That should contain all of the inservice withdrawal information.ERISA allows for a minimal copying charge but the Plan is obligated to provide the info on request.

Simpler solution, transfer to a MM or ST bond fund within the Plan. No fuss, no muss, no cost and you build up some goodwill for the future.  A 20k ticket is not going to be a lifestyle changer and the advice may pay off down the road or in some current referrals.

Aug 19, 2010 10:42 am

Hey guys, where did u obtain the in-service list? I have one from 6 years ago that lists companies than don't even exist anymore, and I am looking for a new updated one.

Aug 19, 2010 10:56 am

I got a list many years ago from a wholesaler.  If you google isnhw employer list, the first link will take you to some insurance companies' list.  There's one on the Jones intranet.  I didn't double check it against the one Jones has, but they're more than likely the same.  I don't know how old the Jones list is or if there is someone responsible for updating it. It may be 6 years old like your list.

For the most part the names on those lists are really big, 5000+ employee, companies.  I've rolled a few from AT&T and Boeing.  They were super easy. 

Aug 19, 2010 11:08 am

Lol I got mine from a wholesaler too... I guess we have the same one

Aug 19, 2010 3:10 pm

[quote=nth203]

I have a client who has a small 401k at IBM (20K). Its lost some money and she'd like to roll over what she has earned now to my firm while still contributing at IBM receiving the employer match. I believe it would be a non-hardship withdrawal. IS this possible while still being employed? Ive asked a few people and been told yes and no. Ultimately Ill  have to sit down with client and call the plan admin. to get answers but I thought Id give a try here first. Thanks in advance

[/quote]

20K.?

All this effort for 20K

do you target peanut accounts like this?

not trashing.   just dont understand how you can survive  

Aug 19, 2010 3:27 pm

I was thinking the same thing, but didn't wanna bring it up and be a "debbie downer" as the kool-aid drinkers in my office claim that I am whenever I hear them fight over small stuff. I do agree that the 20k isn't worth the effort, unless he already has existing assets with his client under management and is doing this to consolidate the clients accts.

Aug 19, 2010 5:23 pm

Certainly 20k is worth chasing if is going to put it into an 18 year EIA...  and it solves the problem of no more losses for the client....

This is not me typing this....someone else by the name of Bud Weiser has hijacked this account......The real Bud Fox cannot do EIA's...

Its 5 o'clock somewhere.....

Aug 19, 2010 5:25 pm

Can I be ur alter ego?

Aug 19, 2010 9:00 pm

u surz can buddy

Aw sheet....Happi huor is overts...can someones gives meeza ride home...fukc it...i can drive.....

 

sent via verizon blackberry @ 8:55pm  8/19/2010

Aug 19, 2010 10:21 pm

Thank you for the feedback. She does need to be 59.5 yrs of age. She is 57. SO no go. I will restructure within the plan. As for why I am chasing 20k? I turn no one away. 20k or 300K I service all. Thank you very much. And yes I do hold her portfolio outside of her 401k. Thanks B24, spaceman and josephus. It is much appreciated