RiverSource?

[wrigley]

www.riversource.com

Anyone ever hear of this place? My daughter can participate in her company matching (3% max) Simple IRA and it is with RiverSource Investments. I looked at the funds that she has to choose from and the fees are outrageous! Thanks

Mike

 

[clifp]

Yup you are right. Riversource is mutual fund company that is a subsidiary of those fine financial advisers at Amerprise. I read the prospectus for some of their offering and they combine really high fees with truly mediocre performance. (There maybe a relationship between these two ).

I hate to say it but this maybe one of those rare times that you be better off telling your daughter to contribute up to the match, put the money in a money market fund, and then try and figure out how she can move the money into a self-directed IRA.

Of course the ideal situation would be to get your daughter's company out of the evil clutches of Amerprise...

 

[wrigley]

Yup you are right. Riversource is mutual fund company that is a subsidiary of those fine financial advisers at Amerprise. I read the prospectus for some of their offering and they combine really high fees with truly mediocre performance. (There maybe a relationship between these two ).

I hate to say it but this maybe one of those rare times that you be better off telling your daughter to contribute up to the match, put the money in a money market fund, and then try and figure out how she can move the money into a self-directed IRA.

Of course the ideal situation would be to get your daughter's company out of the evil clutches of Amerprise...

I started looking at these funds yesterday when she told me the name of the company and I thought to myself "what kind of a railroad job is this". I'd like for her to at least get the free company money offered but not at the risk of losing everything that she puts in!

I don't think I even saw a MM fund. Is the Cash Management Fund the closest thing? Thanks

Mike

 

[lucija]

She may want to find out more about the plan itself... Depending on how the plan is structured, it could be the case that the company will fund SIMPLE IRA for all employees, regardless of their participation. Also, wasn't that a rule that after 2 yrs one can do an in-service rollover, pull out funds out of the SIMPLE IRA and roll them over elsewhere? (Again, this may be plan specific)

 

[wrigley]

She may want to find out more about the plan itself... Depending on how the plan is structured, it could be the case that the company will fund SIMPLE IRA for all employees, regardless of their participation. Also, wasn't that a rule that after 2 yrs one can do an in-service rollover, pull out funds out of the SIMPLE IRA and roll them over elsewhere? (Again, this may be plan specific)

I'm not following you. Are you saying the company will put money in a Simple IRA in her name even if she doesn's put any of her money in it?

Thanks
Mike

 

[wrigley]

She may want to find out more about the plan itself... Depending on how the plan is structured, it could be the case that the company will fund SIMPLE IRA for all employees, regardless of their participation. Also, wasn't that a rule that after 2 yrs one can do an in-service rollover, pull out funds out of the SIMPLE IRA and roll them over elsewhere? (Again, this may be plan specific)

Yep......

Rollover Rules

The IRS says you may roll over your SIMPLE IRA plan to another SIMPLE IRA retirement plan without facing any tax consequences. The eligible rollover distribution (or transfer) is tax-free under IRA rules. You can also roll over your SIMPLE IRA to another IRA plan that is not classified as a SIMPLE IRA, such as another IRS-qualified plan, a deferred governmental compensation plan or a tax-sheltered annuity plan says the IRS.

You are allowed to accomplish this rollover, however, only after two years of originally participating in the SIMPLE plan. This two-year time period is known as "the two-year rule." According to the IRS Publication 590 "Individual Retirement Arrangements," if your rollover or withdrawal does not satisfy the two-year rule, it will be considered an early distribution. At this point, the IRS will apply a 25 percent tax on the amount you withdraw.


Read more: Simple Ira Withdraw Rules | LIVESTRONG.COM

 

[lucija]

I'm not following you. Are you saying the company will put money in a Simple IRA in her name even if she doesn's put any of her money in it?

Thanks
Mike

Yes, that could be the case... most likely, however, they will provide 3% dollar-for-dollar match.

Retirement Plans FAQs regarding SIMPLE IRA Plans

From IRS website:
How much must be contributed for employees participating in a SIMPLE IRA plan?
In addition to the employees' salary reduction contributions, the employer is generally required to match each employee's salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee's compensation. Instead of the matching contribution, the employer may choose to make nonelective contributions of 2% of the employee's compensation (compensation used for this contribution is limited to $245,000 in 2009 and 2010 and is subject to cost-of-living adjustments for later years). If the employer chooses to make nonelective contributions, it must make them for all eligible employees whether or not they make salary reduction contributions. However, the employer may choose to give the nonelective contributions only to eligible employees who make $5,000 or more in the year, if the document so provides.

 

[clifp]

I started looking at these funds yesterday when she told me the name of the company and I thought to myself "what kind of a railroad job is this". I'd like for her to at least get the free company money offered but not at the risk of losing everything that she puts in!

I don't think I even saw a MM fund. Is the Cash Management Fund the closest thing? Thanks

Mike

Cash Management Fund sounds like a MM fund to me.

 

[wrigley]

Yes, that could be the case... most likely, however, they will provide 3% dollar-for-dollar match.

Retirement Plans FAQs regarding SIMPLE IRA Plans

From IRS website:
How much must be contributed for employees participating in a SIMPLE IRA plan?
In addition to the employees' salary reduction contributions, the employer is generally required to match each employee's salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee's compensation. Instead of the matching contribution, the employer may choose to make nonelective contributions of 2% of the employee's compensation (compensation used for this contribution is limited to $245,000 in 2009 and 2010 and is subject to cost-of-living adjustments for later years). If the employer chooses to make nonelective contributions, it must make them for all eligible employees whether or not they make salary reduction contributions. However, the employer may choose to give the nonelective contributions only to eligible employees who make $5,000 or more in the year, if the document so provides.

It's 1 for 1 up to a max employer contribution of 3%. Thanks

Mike