Veritas or Sea-Tax

[JoshinNC]

I just got back from my annual compliance conference for my BD and was introduced to IRS rule 90-24. The rule simply allows 403b accounts to be rolled to any VA product prior to the end of the year, whether that carrier is currently in the 403b program for the employer. Supposedly at year end all 403b accounts will be limited to 1 or maybe 2 providers, similar to 401k's. Have you heard anything about this, and how are you applying it to your business?

I'm going to be contacting all of my teacher and non-profit clients this week? Maybe I can go to the schools and do a free seminar during those two weeks when the teachers are there but the kids are gone in the summer?

[sea-tax]

I just got back from my annual compliance conference for my BD and was introduced to IRS rule 90-24. The rule simply allows 403b accounts to be rolled to any VA product prior to the end of the year, whether that carrier is currently in the 403b program for the employer. Supposedly at year end all 403b accounts will be limited to 1 or maybe 2 providers, similar to 401k's. Have you heard anything about this, and how are you applying it to your business?

I'm going to be contacting all of my teacher and non-profit clients this week? Maybe I can go to the schools and do a free seminar during those two weeks when the teachers are there but the kids are gone in the summer?

I have not heard about this yet. Most my teachers that are participating in a 403b I already manage the money. Most of them have mutual fund options, they also have VA options but I have not found one in the plans worth a grain of salt. Up here in washington most of the 403b plans for teachers have Oppy funds as a choice and so I allocate them amongst those funds.

[JoshinNC]

how do you manage their money if you're not running the 403b?

I have not heard about this yet. Most my teachers that are participating in a 403b I already manage the money. Most of them have mutual fund options, they also have VA options but I have not found one in the plans worth a grain of salt. Up here in washington most of the 403b plans for teachers have Oppy funds as a choice and so I allocate them amongst those funds.

I've never been involved in 403b's before, but the ING wholesaler was really pushing this rollover option. I need to do the research on the rule, but it seems that Congress wants to make it "easier" by limiting the options available in the plans to one vendor. Unfortunately, if the school board or non-profit picks a bad vendor everyone is stuck with that vendor. Under this rule the employees can roll out their current balance to a new VA outside the plan, but would still be limited to future contributions to only the "approved" vendors plan.

[erchess]

Quick Question

What sorts of retirement plans are available to small business owners and are allowed to own individual equities? Can any do options, shorts, and so on? I am a swing trader, rarely holding a position more than two or three days but also rarely closing a position out the same day I open it. I would not like to own a mutual fund other than an etf. I do buy and hold individual bonds. I don't manage anyone's money but my own and I don't intend to change that.

[JoshinNC]

Any IRA based plan can own individual equities,

What sorts of retirement plans are available to small business owners and are allowed to own individual equities? Can any do options, shorts, and so on? I am a swing trader, rarely holding a position more than two or three days but also rarely closing a position out the same day I open it. I would not like to own a mutual fund other than an etf. I do buy and hold individual bonds. I don't manage anyone's money but my own and I don't intend to change that.

so a ROTH, Traditional, SIMPLE or SEP would work. I believe you can own ETF's in 401k's, but am not 100% sure on that one.

[Joe Btfsplk]

Options, shorts, etc in retirement plan

What sorts of retirement plans are available to small business owners and are allowed to own individual equities? Can any do options, shorts, and so on? I am a swing trader, rarely holding a position more than two or three days but also rarely closing a position out the same day I open it. I would not like to own a mutual fund other than an etf. I do buy and hold individual bonds. I don't manage anyone's money but my own and I don't intend to change that.

In my rollover IRA I can short-sell puts, sell covered call options and buy calls. I cannot sell short on stocks or short calls unless I own the underlying stock. My account is with E-trade.

[sea-tax]

I've never been involved in 403b's before, but the ING wholesaler was really pushing this rollover option. I need to do the research on the rule, but it seems that Congress wants to make it "easier" by limiting the options available in the plans to one vendor. Unfortunately, if the school board or non-profit picks a bad vendor everyone is stuck with that vendor. Under this rule the employees can roll out their current balance to a new VA outside the plan, but would still be limited to future contributions to only the "approved" vendors plan.

Josh, you can manage the money similar to how you can manage the money in a simple plan. The account and the money are owned by the individual. There usually is no vesting schedule with a simple or a 403b. Therefore you can become the rep of record so long as your BD has a selling agreement with the company on the plan.

[JoshinNC]

I'll take note of that

Josh, you can manage the money similar to how you can manage the money in a simple plan. The account and the money are owned by the individual. There usually is no vesting schedule with a simple or a 403b. Therefore you can become the rep of record so long as your BD has a selling agreement with the company on the plan.

I don't do any "managed money" yet, but am considering getting my RIA license. My BD has a management arm that does active management using either mutual funds or stocks and bonds, which we can tie into. Supposedly this makes sense because I don't have to spend the time managing the money, but I can still layer on a .5 - 1% fee. I'm thinking that this would definately work for larger accounts (mayber $200,000 and above) while still working as a straight brokerage for the smaller ones. I may even tell investors with account values in excess of a certain threshold (mayber $500,000) that they recieve free or steeply discounted tax work if we manage their money, provided I can get that through compliance.

What percentage of your accounts, if you don't mind me asking, are fee based vs. straight brokerage?

[sea-tax]

"What percentage of your accounts, if you don't mind me asking, are fee based vs. straight brokerage?" JoshinNC

To be quite honest Josh I am not sure. I usually let the client dictate what they want. I would say 40-60 fee based to commission based.
Some Clients are leaving brokers because of the fee based and will not allow that kind of agreement, others are the exact opposite. I personally am not sure for two reasons.
One I don't usually do the setup paperwork, have an assistant for that. Two I try to focus on the big picture and let the others who work for me worry about the little details.

What I was getting at was that if you have a client with a 403b you can become the rep of record on the account even if you are not the company who set the plan up. I am not sure if you can charge them fee based. I know you can start to collect the trailers and comm on the new and old money invested though.