Author Topic: Mandatory Roth IRA contribution  (Read 1752 times)

light switch

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Mandatory Roth IRA contribution
« on: October 02, 2018, 12:00:56 PM »
Hello all,

I can't pretend to be on the level as most of you here, but I wanted to ask this question in hopes there may be some basis in fact of what I've been told, that I've so far been unable to find on the internet.  I have been instructed by my financial adviser that due to a new law, I had to set up a monthly contribution amount for my Roth IRA, and that this contribution cannot be cancelled, or otherwise modified in any way, under penalty of never being able to contribute to the fund again.  Now as I write this, it seems pretty stupid.  But I of course want to fund my Roth IRA, so I said OK, and let them process the paperwork for that to happen.  In the interim, I've searched the internet, and asked other people who I know are investing, and none of them have heard anything about such a rule.  Am I being duped? 


swinginbeef

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Re: Mandatory Roth IRA contribution
« Reply #1 on: October 02, 2018, 12:14:31 PM »
fund your IRA on YOUR schedule, not theirs. I've never heard of anything like this.

Dragonswan

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Re: Mandatory Roth IRA contribution
« Reply #2 on: October 02, 2018, 12:38:57 PM »
Ask your financial adviser for a reference to the new law. 

terran

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Re: Mandatory Roth IRA contribution
« Reply #3 on: October 02, 2018, 12:41:30 PM »
Yeah, no. But you should max that thing out anyway (or a traditional IRA).

Take this opportunity to drop the financial advisor.

erutio

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Re: Mandatory Roth IRA contribution
« Reply #4 on: October 02, 2018, 12:42:14 PM »
Hello all,
  I have been instructed by my financial adviser that due to a new law, I had to set up a monthly contribution amount for my Roth IRA, and that this contribution cannot be cancelled, or otherwise modified in any way, under penalty of never being able to contribute to the fund again.  Now as I write this, it seems pretty stupid.   

Yes, you are correct.

Please fire your financial advisor.

You can go straight to the source if you want to see for yourself.
https://www.irs.gov/retirement-plans/roth-iras


erutio

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Re: Mandatory Roth IRA contribution
« Reply #5 on: October 02, 2018, 12:49:16 PM »
Now that I think about it, it is hard to believe a "financial adviser" would blatantly lie to you to this extent. Anyone could spend 30 seconds on the internet and find out that what he/she was not true. 

Is it possible you missheard, ie. the financial advisor was speaking about another financial vehicle and you thought you were still talking about Roths.

pbnj

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Re: Mandatory Roth IRA contribution
« Reply #6 on: October 02, 2018, 01:18:55 PM »
What was this advisor selling? 

Agree with prior advice, fire him.  Open Roth at Vanguard or Fidelity.

ixtap

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Re: Mandatory Roth IRA contribution
« Reply #7 on: October 02, 2018, 01:22:06 PM »
If you are sure that is what you were told, report your financial advisor for fraud.

DS

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Re: Mandatory Roth IRA contribution
« Reply #8 on: October 02, 2018, 01:43:17 PM »
This is Murica. Not obligated to save a dime!

dleavitt

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Re: Mandatory Roth IRA contribution
« Reply #9 on: October 02, 2018, 03:13:33 PM »
Any chance you are a resident of the People's Democratic Republic of Oregon?

We did just start the sh*tastic Oregon Saves program, where they are forcing employers who don't have employer-sponsored retirement plans to withhold employee wages to contribute to a crappy Roth IRA unless the employee actively opts out.  I don't know whether you can participate in the program after opting out (not that you would), but it almost sounds something like that.

Regardless, you should fire your adviser and DIY because that's how we roll.

light switch

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Re: Mandatory Roth IRA contribution
« Reply #10 on: October 02, 2018, 03:19:58 PM »
Iím sure itís what he said. Later I called to find out if I could change the account they were drawing from and not risk any problem, ďsince it had to be all locked in now.Ē His assistant promised to check into it. She later called back with the news that because Iíd acted fast, my account was grandfathered in, and there wouldnít be any problem changing which account the money came from.

Someone asked what he was selling. That day, he convinced me to open another account/fund in my Roth IRA. Iirc, to avoid any hassles later with the new law. Wow, Iím a capital moron. I should have written it down at the time. It really looks ludicrous in print.

ixtap

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Re: Mandatory Roth IRA contribution
« Reply #11 on: October 02, 2018, 03:27:15 PM »
Any chance you are a resident of the People's Democratic Republic of Oregon?

We did just start the sh*tastic Oregon Saves program, where they are forcing employers who don't have employer-sponsored retirement plans to withhold employee wages to contribute to a crappy Roth IRA unless the employee actively opts out.  I don't know whether you can participate in the program after opting out (not that you would), but it almost sounds something like that.

Regardless, you should fire your adviser and DIY because that's how we roll.

"You can choose to save more or less, starting as low as 1%. You can change the contribution amount at any time online, by phone, or through your employer. If you do not want to participate in OregonSaves, you can always opt out. You may opt back into making contributions to your OregonSaves account at any time in the future."

carolina822

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Re: Mandatory Roth IRA contribution
« Reply #12 on: October 02, 2018, 03:31:33 PM »
Iím sure itís what he said. Later I called to find out if I could change the account they were drawing from and not risk any problem, ďsince it had to be all locked in now.Ē His assistant promised to check into it. She later called back with the news that because Iíd acted fast, my account was grandfathered in, and there wouldnít be any problem changing which account the money came from.

Someone asked what he was selling. That day, he convinced me to open another account/fund in my Roth IRA. Iirc, to avoid any hassles later with the new law. Wow, Iím a capital moron. I should have written it down at the time. It really looks ludicrous in print.

This sounds shady as hell. You should probably take some identity theft protection/monitoring steps since this outfit has your personal and banking information. And report them to the commission that oversees such things in your state. At the very least, I would stop doing business with this company ASAP. It sucks when you're trying to take a positive step and someone feels entitled to take advantage.

diapasoun

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Re: Mandatory Roth IRA contribution
« Reply #13 on: October 02, 2018, 03:36:49 PM »
Iím sure itís what he said. Later I called to find out if I could change the account they were drawing from and not risk any problem, ďsince it had to be all locked in now.Ē His assistant promised to check into it. She later called back with the news that because Iíd acted fast, my account was grandfathered in, and there wouldnít be any problem changing which account the money came from.

Someone asked what he was selling. That day, he convinced me to open another account/fund in my Roth IRA. Iirc, to avoid any hassles later with the new law. Wow, Iím a capital moron. I should have written it down at the time. It really looks ludicrous in print.

This sounds shady as hell. You should probably take some identity theft protection/monitoring steps since this outfit has your personal and banking information. And report them to the commission that oversees such things in your state. At the very least, I would stop doing business with this company ASAP. It sucks when you're trying to take a positive step and someone feels entitled to take advantage.

All of this. Every single thing you've told us about this advisor so far has bad, bad vibes.

light switch

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Re: Mandatory Roth IRA contribution
« Reply #14 on: October 02, 2018, 06:23:52 PM »
Iíve been going through this brokerage for 15 years. This is the first time theyíve steered me wrong that I know of.  At any rate, I do have plans to end my dealings with them hastily.  I was hoping that heíd been honest. After 15 years, I guess I just stopped second guessing him.

I thank you all for your advice.

Dragonswan

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Re: Mandatory Roth IRA contribution
« Reply #15 on: October 03, 2018, 07:19:46 AM »
If you are sure that is what you were told, report your financial advisor for fraud.
This is where I was going with my question for the adviser.  This gives you an open and shut case for fraud if he tries to give a reference because he can't then back peddle and say you misunderstood him or didn't say that.

light switch

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Re: Mandatory Roth IRA contribution
« Reply #16 on: October 03, 2018, 09:12:05 PM »
I found something that explains it. He was talking about ďthe fiduciary ruleĒ , which actually was put in place in January of this year.  I donít have a full grasp of it yet. But what I do know is that it has something to do with commissions on the sale of mutual funds.  Any firm who pays commissions to itís brokers, had to make changes.  I can say I honestly never knew my broker was getting a commission. I knew they had fees, but Iím fairly certain I never would have dealt with them had I known they might recommend a certain fund in order to get a higher commission. Have I mentioned how ignorant Iím learning I am lately?

secondcor521

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Re: Mandatory Roth IRA contribution
« Reply #17 on: October 04, 2018, 12:31:17 AM »
I have been instructed by my financial adviser that due to a new law, I had to set up a monthly contribution amount for my Roth IRA, and that this contribution cannot be cancelled, or otherwise modified in any way, under penalty of never being able to contribute to the fund again.

I found something that explains it. He was talking about ďthe fiduciary ruleĒ , which actually was put in place in January of this year.

I can't imagine how the fiduciary rule has anything to do with mandatory Roth IRA contributions.  It would be apples and oranges, except apples and oranges are both fruit.  It's more like apples and the theory of relativity, or apples and the USA's miracle on ice win over the Soviet Union in hockey in 1980, except Mike Eruzione probably ate an apple once.

I would walk away quickly and remove all of your money from this advisor and place it with a respected firm.

terran

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Re: Mandatory Roth IRA contribution
« Reply #18 on: October 04, 2018, 05:36:07 AM »
I found something that explains it. He was talking about ďthe fiduciary ruleĒ , which actually was put in place in January of this year.  I donít have a full grasp of it yet. But what I do know is that it has something to do with commissions on the sale of mutual funds.  Any firm who pays commissions to itís brokers, had to make changes.  I can say I honestly never knew my broker was getting a commission. I knew they had fees, but Iím fairly certain I never would have dealt with them had I known they might recommend a certain fund in order to get a higher commission. Have I mentioned how ignorant Iím learning I am lately?

The fiduciary rule says your financial advisor is legally obligated to do and recommend what's in your best interest regardless of his/her interests. Nothing about Roth IRAs. So basically, if changes are being made, your advisor WAS NOT doing what was in your best interest before. I also doubt he/she is doing what's in your best interest now other than the bare minimum their firm is requiring to make it look like they're complying with the law.

It's time to drop this joker. They're clearly a talker (possibly a liar) for a living, and they've shown that they can manipulate you. This is nothing against you, they've heard all of your objections before and their livelihood depends on coming up with plausible sounding explanations that make it sound like "poor little light switch was just confused about what I said because this stuff is complicated, but don't worry about it because I'm a professional and I can take care of you."

Don't bother trying to argue with them, you'll never win. Call up Vanguard and ask them to help you move all the different account types you have with this firm to them. You may still need the advisor to help you move things and you may need to fill out al kinds of forms because that's how sneaky firms like this do it to try to get you to give up and stay with them. Don't engage in the advisors arguments, just keep repeating that you've decided to move your accounts and you would appreciate if they could help you do that.

erutio

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Re: Mandatory Roth IRA contribution
« Reply #19 on: October 04, 2018, 07:26:36 AM »
I found something that explains it. He was talking about ďthe fiduciary ruleĒ , which actually was put in place in January of this year.  I donít have a full grasp of it yet. But what I do know is that it has something to do with commissions on the sale of mutual funds.  Any firm who pays commissions to itís brokers, had to make changes.  I can say I honestly never knew my broker was getting a commission. I knew they had fees, but Iím fairly certain I never would have dealt with them had I known they might recommend a certain fund in order to get a higher commission. Have I mentioned how ignorant Iím learning I am lately?

This is a straight up lie about what "the fiduciary rule" is. 

You need to cut your losses now and get out. 

Since this is fraudulent behavior, do you mind or feel comfortable telling us his name and his agency?  I think this would be important to warn others.



kpd905

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Re: Mandatory Roth IRA contribution
« Reply #20 on: October 04, 2018, 06:59:10 PM »
Can you list the individual funds that this advisor has you invested in?

light switch

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Re: Mandatory Roth IRA contribution
« Reply #21 on: October 05, 2018, 12:19:30 PM »
I don't think it'd be appropriate to name my agent. I've done some reading over the last few days, and it's very possible that my own understanding is lacking enough that my retelling of the story is missing key details, that might completely change a persons opinion on the matter.  I think the only person I can rightly blame is myself.  After all, it's me who selected him to handle this for me.  I have had plenty of time over the years to re-evaluate this, and never really did until his firm was required to make changes to the way they operate in order to comply with the fiduciary rule.  As one member said, that alone is evidence enough that it wasn't being handled with regard to my best interest.  So I'll get that ball rolling, and I hope to set up one of those "case studies" one of these days.  As it stands, the best I can see for myself is retirement at 58 or so.  I'd love to see someone crush that notion to bits. 

Thanks again to everyone who contributed replies.  I probably left some unanswered questions, but just know that I do appreciate everyone's effort.  Thank you.

cchrissyy

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Re: Mandatory Roth IRA contribution
« Reply #22 on: October 05, 2018, 01:02:45 PM »
wow i'm so sorry about all the bad information he gave you, as well as whatever was being mismanaged over the years before the fiduciary rules changed.


When you open your account at Schwab or Vanguard, you can ask them to transfer your existing investments for you. Like, you don't have to talk to this guy ever again. They can handle it. You'll just need a copy of your recent statement(s) so you can tell them exactly what accounts you're moving.

back to you original question, you can fund your IRA steadily or all at once and either way is completely normal and fine.

edit to add - don't kick yourself too much for trusting this guy. sure you could have been more skeptical. but you trusted a so-called professional to do his job. that was a reasonable thing to do.  it just turns out his entire job was to sell you on the image of himself as a capable likable trustworthy guy, and to not let you understand the many ways he made fees off of you.
« Last Edit: October 05, 2018, 01:05:14 PM by cchrissyy »