NOTICE TO CLIENTS REGARDING IRA ROLLOVERS FROM QUALIFIED EMPLOYER SPONSORED RETIREMENT PLANS AND IRAS
Clients and prospective clients considering a rollover from a qualified employer sponsored workplace retirement plan (“Employer Retirement Plan”) to an Individual Retirement Account (“IRA”), or an IRA to another IRA, are encouraged to consider and to investigate the advantages and disadvantages of an IRA rollover from their existing plan or IRA.
General Considerations for Rolling Over Assets
Pearl Planning, LLC (“Pearl Planning”) manages investments for clients in advisory accounts and charges a fee to manage accounts. In addition to the fees charged by Pearl Planning, the underlying investment (mutual fund, ETF, annuity, or other investment) may also charge a management fee. Custodial and trading fees may also apply.
Before electing to roll over assets from your current Employer Retirement Plan or IRA to an IRA managed by Pearl Planning, listed below are several important considerations:
- The type of investment management desired. For example, is assistance in the management of investments desired on a discretionary or non-discretionary basis; or is a self-managed account preferred?
- The professional advisory services available to you in your current Employer Retirement Plan or IRA compared to the advisory services offered by Pearl Planning in an Pearl Planning -managed IRA account; and
- The cost of account fees and expenses, any potential advisory fees and expenses, and administrative fees and expenses associated with remaining in your current Employer Retirement Plan or IRA versus the fees and expenses of rolling over your current retirement assets to an IRA managed by Pearl Planning.
Considerations Specific to Rolling Over Assets from Your Employer Retirement Plan
Regulatory authorities have advised investors that they may face increased fees when they transfer retirement savings from their current Employer Retirement Plan to an IRA rollover account. The regulators have advised investors that even if there are no costs associated with the IRA rollover itself, there will be costs associated with account administration, investment management or both. The advisory fees associated with Pearl Planning managing your IRA will typically be more expensive than the advisory fees that you incur under your current Employer Retirement Plan.
Before electing to roll over assets from your current Employer Retirement Plan to an IRA managed by Pearl Planning, listed below are several other important considerations:
- Your potential alternatives to a rollover, including:
- Leaving the money in your former Employer Retirement Plan, if permitted;
- Rolling over the assets to your employer’s plan, if one is available and if rollovers are permitted;
- Rolling over Employer Retirement Plan assets into an IRA; or
- Cashing out (or distribute) the Employer Retirement Plan assets and paying the taxes due;
- Available investment alternatives. Does your plan only permit the selection of certain target date mutual funds? Are you interested in other unavailable investment options?
- Management expenses associated with the underlying investments in an IRA advisory account vs. the underlying investment expenses associated with the current Employer Retirement Plan. Often, the management expenses in the current Employer Retirement Plan are less expensive than in a rollover IRA advisory account;
- Custodial charges in an advised IRA account with Pearl Planning vs. the current Employer Retirement Plan;
- Transaction charges associated with the advised IRA vs. the current Employer Retirement Plan;
- The rules pertaining to the required minimum distributions in the current Employer Retirement Plan when compared to the advised IRA;
- Legal protections afforded to current Employer Retirement Plan participants and to rollover IRA account owners. Employer Retirement Plans have significant liability protection;
- The rules pertaining to beneficiaries of an IRA vs. the current Employer Retirement Plan (inherited accounts);
- The loan provision associated with the current Employer Retirement Plan, if any. IRA accounts do not have loan provisions; and
- Employer Retirement Plans that may be available from a new employer.
Fiduciary Acknowledgment and Rollover Conflict of Interest
When Pearl Planning provides investment advice to you regarding your retirement plan account or individual retirement account, it is a fiduciary within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts.
The way Pearl Planning makes money creates some conflicts with your interests, so Pearl Planning operates under a special rule that requires it to act in your best interest and not put its interests ahead of yours. Consistent with this fiduciary duty, Pearl Planning is required to disclose applicable conflicts of interest associated with Pearl Planning’s rollover recommendation. Pearl Planning’s rollover recommendation creates a conflict of interest if Pearl Planning will earn a new (or increase its current) advisory fee on the rolled over assets. Please see Pearl Planning’s Form ADV Part 2A, a free copy of which is available upon request, for further information regarding Pearl Planning’s services, fees, and other conflicts of interest.