{"id":18,"date":"2005-08-23T09:35:06","date_gmt":"2005-08-23T13:35:06","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/rlucastemp\/2005\/08\/23\/howto-getting-your-profit-sharing-"},"modified":"2005-08-23T09:35:06","modified_gmt":"2005-08-23T13:35:06","slug":"howto-getting-your-profit-sharing-plans-rolled-out-of-fidelitys-non","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/2005\/08\/23\/howto-getting-your-profit-sharing-plans-rolled-out-of-fidelitys-non\/","title":{"rendered":"[HOWTO] Getting your profit-sharing plans rolled out of Fidelity’s non-prototype retirement accounts as qualified distributions to separate IRAs or 401ks."},"content":{"rendered":"

<\/a><\/p>\n

If you are a small business with a Profit Sharing Plan \/ defined
\nbenefit plan set up through an independent benefit advisor firm,
\nsomeone may have counseled you to set up your investments at
\nFidelity.  They will create a “Non-prototype retirement account”
\nin the name of your Profit Sharing Plan trust.  You can make
\ntrades and do what you will (although as of late they refuse to let you
\nbuy funds that have even potentially a short term sales charge, which
\nreally drastically limits you) and it’s all for the big pool of
\nmoney.  As a “non-prototype” plan, Fidelity washes their hands of
\nthe actual record-keeping of who is owed what and how much is vested to
\nwhom, etc.  That’s why you’re paying your independent benefits
\nadvisor all those fees each year, right?<\/p>\n

When you discover that the costs invoved are so high as to cut
\nseriously into your returns, you’ll want to dissolve your profit
\nsharing plan and distribute the assets among the beneficiaries so each
\ncan put his funds into a low cost IRA.  Your advisor will have you
\nprepare corporate resolutions to that effect and tell you to distribute
\nthe funds payable to the IRAs or 401ks of the beneficiaries, so that
\nthey are qualified rollovers and so nobody has to withhold taxes for
\nthe IRS.<\/p>\n

Try telling that to Fidelity.  If your experience is like mine,
\nthey’ll have no idea, then check on things for you.  They’ll come
\nback and say that they can make a check payable to the Trustees, to the
\nPlan, or they can do a qualified rollover to Fidelity.  They will
\nswear up and down that they can’t send the money to a “contra FI”
\n(another bank).  They’ll transfer you to “Retail Distribution,”
\nwho will tell you that they can only pay out to the order of the
\ntrustees, and that maybe you could have your trustees all sign the
\ncheck and then cash it at a bank, but that oh, yes, maybe, I suppose
\nyou could get checkwriting privileges on the Fidelity account
\nitself.  If you are unlucky, you might try to do this.<\/p>\n

However, if things get more and more fubared on your phone call, you
\nmight get transferred to “Retirements Department” where someone puts
\nyou on hold two more times to research and then discovers that yes,
\nthose things mentioned above (only payable to the trustees or via a
\nFidelity rollover) are trueish but there is one magical thing to do
\notherwise, that will without any fee, cause the funds to be sent to the
\nnew banks and the new IRAs, and that is this.<\/p>\n

Prepare a letter containing these magical 5 elements:<\/p>\n

1. Direction to Fidelity to make a check payable to “Contra FI FBO
\nEmployee Name Account” (e.g., “Vanguard Funds FBO John Smith Rollover
\nIRA”), in an exact dollar amount, and with the address to which to send
\nthat check.<\/p>\n

2. Certification by the trustees that the distribution is an “eligible rollover distribution.”<\/p>\n

3. Statement that the trustees assume all responsibility for
\nrecord-keeping for the plan assets and for reporting the distribution
\nto the IRS for tax purposes.<\/p>\n

4. Statement that the trustees indemnify and hold Fidelity harmless for
\nany liability with respect to processing the direct rollover.<\/p>\n

5. Original signature with a bank’s signature guarantee from EACH of
\nthe trustees (each must take the letter to the bank and sign in their
\npresence).<\/p>\n

Send this mystical incantation, the specs of which are not available to phone reps or on the web site, to:<\/p>\n

Fidelity Investments
\nAttn: Distribution Services
\nPO BOX 770001
\nCincy OH 45277-0035<\/p>\n

To their (sort of) credit, they had previously hinted to another
\ntrustee that they needed a “distribution letter,” but did not mention
\nthe 5 requirements, and when I called back to ask about it, had to put
\nme on hold 6 times and transfer me twice to get me the magical list of
\nthings to do.  My cell phone is now almost out of batteries after
\nnearly 40 minutes on the line with them.  They were certainly
\npolite about the whole thing but it does seem a bit disingenuous of
\nthem to keep insisting that we roll into Fidelity IRAs and “forgetting”
\nabout this handy exception.<\/p>\n

Of course, if you do this, you had better be damn sure that your p’s
\nare crossed and your q’s are dotted with respect to telling Uncle Sam
\nabout the whole thing since Fidelity has now washed its hands of you.<\/p>\n

Enjoy your new, rolled-over, low-overhead IRAs and 401ks!<\/p>\n","protected":false},"excerpt":{"rendered":"

If you are a small business with a Profit Sharing Plan \/ defined benefit plan set up through an independent benefit advisor firm, someone may have counseled you to set up your investments at Fidelity.  They will create a “Non-prototype retirement account” in the name of your Profit Sharing Plan trust.  You can make trades […]<\/p>\n","protected":false},"author":1180,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-18","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/posts\/18","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/users\/1180"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/comments?post=18"}],"version-history":[{"count":0,"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/posts\/18\/revisions"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/media?parent=18"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/categories?post=18"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/rlucastemp\/wp-json\/wp\/v2\/tags?post=18"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}