Simple ira adoption question

or Register to post new content in the forum



  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
May 14, 2008 1:46 am


  A client of mine works for a small business (about 30 employees) that has a SIMPLE IRA.  The manager of the company tells the employees that they have a "Charles Schwab SIMPLE IRA."  I told my client (who has other accounts with me, as does her husband) that the financial institution is a decision made by each employee, not the employer, in a Simple IRA plan.  Naturally, she wants to bring her Schwab Simple IRA to me.    So I called her boss and left a message on his voicemail that I would be sending down the paperwork with the employee, etc.  He called back, and said (on my voicemail) he didn't have time to even think about "adding my firm" until September!  This didn't please my client, so she really ripped him a new one the next day at work (she is fiesty, and their top salesperson, so she doesn't really think twice about not taking his shit), but he gave her the runaroud (he even told her that Schwab told him that he couldn't use two companies for the Simple plan).  I even previously printed out IRS form 5304-SIMPLE for the the client to show her boss, and highlighted the sentence that plainly states the choice is the employees.   Now I'm just ticked that this guy is wasting my time, and I'm looking for advice on how to proceed.  Can he refuse to send her contributions to my firm?  How long does he have to sign the paperwork once the employee requests the change in writing?  Basically, wtf do you guys think I should do?  It's not a ton of money, but my client already asked around the office and has another 6 co-workers that said they would switch from Schwab (for person to person contact) if we could get this done (but they are not as ballsy and won't go to bat with the boss to make the change).    My first idea is to send the request to this guy in writing, and get it notarized (with the promise that my next step will be to visit the local IRS office for assistance with the issue), but I'm not sure if that's the best idea.  I'd rather a synergy than a pissing contest...although this company is based 2 towns away, and this guy really has no pull or worth in my community, so I'm not really concerned about pissing him off (and neither is my client) - so push coming to shove is no big deal.  Obviously though, I don't want to make assertions I cannot follow through on.   Man this guy has me ticked...he's a short guy with Napoleon syndrome, and a star wars freak (no offense if any of you are).   Thanks in advance!
May 14, 2008 2:40 am

That all depends on whether or not they truly set it up as a Designated Financial Institution or not.  He (the boss) could be correct.  What you need is the copy of the SIMPLE disclosure the boss gave the employee.  If he used the standardized document from the IRS website 5304 you are absolutely correct.  If they used 5305 you could be facing a situation where the employees truly do not have a choice.  I am only familiar with 5304 because I don’t want my clients to have fiduciary responsibilities that extend beyond basic record keeping and proper submission of funds.  So, my approach would be get your hands on a copy of what the employer is giving the employees.  Then, if it is a 5304, offer to help the employer reduce their fiduciary exposure by educating him and offering to be his alternative provider.  Handling small employee contributions is a real administrative headache, so I hope your client is doing a lot of other things with you beyond the SIMPLE.

May 14, 2008 7:47 am

iceco1d, has the plan been in existence for 2 years?  Once a participant has been in for 2 years, they can simply transfer their money.   This is much better than having to answer questions from people who are contributing $50/month.

May 14, 2008 8:50 am

ICE, I don’t know who you work for, or clear through (if Indy), but couldn’t your B/D provide some direction for you?