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Treasury and IRS propose easier 401(k) to IRA rollover rules
The proposal would standardize forms and procedures and shift more paperwork to recordkeepers to speed electronic transfers.
The Treasury Department and the IRS have proposed new guidance to streamline rollovers from 401(k) plans into IRAs, aiming to reduce the administrative burden on retirement plan participants, according to Yahoo Finance.
Under the proposal, recordkeepers would take on more of the work, and the rules would support standardized forms and procedures so financial institutions can coordinate electronic asset transfers more easily than current rollovers that can require multiple steps.
The article describes today’s rollover process as often involving participants contacting both the receiving IRA provider and the old plan recordkeeper, completing documents and verification for each, and sometimes dealing with checks that must be forwarded to the IRA.
Supporters say the changes could save clients potentially dozens of hours, while past survey results from the Government Accountability Office cited by Yahoo Finance found that 25% of recent plan-to-plan rollover participants reported too many steps, 26% said it took too much time or effort, and 20% said their old and new plans did not work together for the rollover request.