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Hello, how can I search 401k plans in my area (Austin, Texas) that have Self-Directed Brokerage Account option?

Sep 12, 2013 by Kenny from Houston, TX in  |  Flag
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Hi Kenny, Just as Martin pointed out, on a company's 5500 filing, the code 2R would indicate the plan includes the provision for the participant to have a self directed brokerage account within the plan. Specifically to how you search, you can google for the website to Larkspur or Free Erisa. Both sites are free and specifically are for qualified plans that have filed a 5500. Larkspur has search fields for city and state but you would have to click on each plan's 5500 and look for the 2R code. Happy hunting.

Rich Kalina Florida Actuarial Corp.

Comment   |  Flag   |  Sep 13, 2013 from Fort Lauderdale, FL

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Kenny, other than just for curiosity, I’m not sure why you would expend energy to find ’other’ plans with a Self-Directed Brokerage option. And, of course, for whatever reason, it's fine for you to look for this info, but for your actual use, it is pretty much academic. Because I’m missing your objective, I am questioning whether you worded the question properly.

401(k) plans are sponsored by your employer, so if you were looking to participate in a 401(k) with a brokerage window, and you were looking for plans that offer it, you would then have to be hired by one of those sponsoring companies. Perhaps you are looking for a plan for your company, in which case, a plan can be designed for your company with a Self Directed brokerage window.

When an employer sets up a plan, they are held responsible for selecting investment options that are appropriate for all employees. So, many employers just won’t take on the risk of offering it. It is generally not recommended. I personally feel it is generally inappropriate. Further, the fees involved in setting up a Self Directed Brokerage account, at least for smaller companies may make them cost prohibitive. So, while it is possible to offer this, it is really not very common. If you are an employee, and not the employer, it may not be likely you will be able to convince your employer to actually start a 401(k) plan and add the brokerage window. They just may not want the fiduciary responsibility that comes with it.

Further, retirement plans are structured to help someone save long term for retirement. In general, if one wanted to buy and sell potentially riskier investments, it is my opinion that they could do so, but should do so in a taxable account.

I hope this gives you some helpful perspective.

Comment   |  Flag   |  Sep 20, 2013 from Delray Beach, FL

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Kenny -

Locating plans with a Self-Directed Brokerage Account (SDBA) option is actually pretty hard. Your best bet is to look through the publicly available 5500 forms that plans have to file. Having worked on the mega-DC side of the business there in Austin for a number of years, I can tell you the majority of plans do not have an SDBA option. As plan size decreases, the likelihood of an SDBA option becomes even less. Bottom line, many employers choose not to open an SDBA window for fiduciary reasons.

Brian Pinkston, CFA, CFP®, Financial Advisor, Anchorage, Alaska

1 Comment   |  Flag   |  Sep 12, 2013 from Anchorage, AK
Kenneth Joseph Landgraf

Thanks Brian.

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Flag |  Sep 12, 2013 near Houston, TX

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Hi Kenny,

In the Summary Plan Description there may be a section entitled "Brokerage Window" or "Self Directed Option". However, in the Form 5500 that is filed by your plan administrator, there is a sectioned entitled "Benefits Provided Under this Section", where there will be a list of codes that corresponds to a definition of sorts. The code that you want to look for is "2R", and the corresponding definition will be entitled "Brokerage Window."

If you see the "2R" code next to the words "Brokerage Window", then it is very likely that your Plan allows you as an employee to use the Self Directed Option. If you have further questions, please feel free to call me at: (240) 245-3434 or send me an email to: msmith@wcfingroup.com.

Take care, Martin

Comment   |  Flag   |  Sep 12, 2013 from Bethesda, MD

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All good answers above. I suppose I'm wondering if you're looking to go to work for a company with a self directed plan? Or, would you be searching for a plan provider for your own company?

Plese advise...

Rod

View all 4 Comments   |  Flag   |  Sep 19, 2013 from Springfield, MO
Rod Miller, CFP®, CLU, ChFC

Wow, that was weird.. Anyway, the advice given above is great... another place you could look is the Lord Abbott site. It'll always be a tough search, but the 5500 and the 2R code is probably your best bet... unfortunately, it may take some time...

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Flag |  Sep 19, 2013 near Springfield, MO
Rod Miller, CFP®, CLU, ChFC

Best of Luck,

Flag |  Sep 19, 2013 near Springfield, MO

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