Why companies make you rollover to IRA ?

L1: Why companies make you rollover to IRA ?It use to be like 5 years back that when you retired after 55 that your 401K was there in the companyto draw out as you wanted. Does it cost the company money to have your 401K stay in the plan.If it wasn”t for them stopping that there wouldn”t be any need for a 72t unless you were younger than 55 when you retired. Any reason? Just curious. Like I”ve said this is a wonderful sight. John2002-12-15 09:53, By: John, IP: [127.0.0.1]
L2: Why companies make you rollover to IRA ?Hello John:
There are at least three reasons (and potentially alot more) that many 401(k) plans are eliminating periodic payment options and are strongly encouraging ex-employees to take their money & roll it to an IRA:
1. In addition to the contribution testing that occurs each year on a plan, each plan is tested for “top heavy” status which is an assets test; e.g. if nnn employees who make (or did make) more than $$$$ per year have $ZZZZ assets in the plan when compared to total assets in the plan then the plan is considered to be top heavy and the funding rules change.
2. Many employers pay all or lions share of administerial costs which is invariably computed by the plan administrator as $XXX per participant per year irrespective of participant status.
3. The same plan administrator will likely charge $25 or so per disbursement.
All of this adds up and employers are always anxious to reduce costs.
TheBadger
wjstecker@wispertel.net

2002-12-15 10:07, By: TheBadger, IP: [127.0.0.1]