Products November 23, 2009

Fidelity Offers Roth Calculators for Advisers

With the new Roth Conversion laws set to go in place January 1, Fidelity Investments said it offers an online Roth IRA conversion calculator for its independent registered investment adviser clients and broker/dealer clients of National Financial.

Reported by

With the online calculator, advisers can walk their clients through a series of questions to help determine if converting to a Roth IRA might be appropriate and then assess whether or not to conduct a full or partial conversion, Fidelity said. Based on the information inputted by the adviser, the calculator can help advisers’ clients decide whether they are likely to benefit from a Roth IRA conversion.

The calculator estimates the potential tax and growth impact of converting full or partial amounts to a Roth IRA versus staying in a traditional IRA or other account type, according to Fidelity. It also estimates lump sum, after-tax value at the initial point of distribution, as well as annual after-tax income generated throughout the distribution period.

The conversion calculator is part of a set of Roth resources Fidelity offers for advisers and brokers, the firm said.

Clients of Fidelity Institutional Wealth Services (IWS) interested in learning more about the Roth conversion resources can contact IWS at 1.800.735.3756 or visit fiws.fidelity.com. Clients of National Financial should call 1.800.752.7053.

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Compliance November 23, 2009

Oregon Settles with Oppenheimer on 529 Plan Losses

The state of Oregon has reached a $20-million settlement with MassMutual Financial Group's OppenheimerFunds Inc. of losses in a bond fund in the state's 529 college-savings plan.

Reported by

The Oregon 529 College Savings Board approved the agreement, which will divide $20 million among roughly 45,000 account holders, based on how heavily individual accounts were invested in the Core Bond Fund, according to The Wall Street Journal.

In April, the Board and the Oregon State Treasurer sued the firm for losses of $36 million incurred by participants in the OppenheimerFunds Core Bond Fund. The suit claimed Oppenheimer Funds represented that certain investments were appropriate for conservative and ultra-conservative portfolios “but shuttled college savings instead into a hedge-fund like investment fund that took extreme risks in a search for speculative large returns.” (see “Oregon Sues 529 Fund Manager”)

Oregon’s Attorney General’s office estimates that about $5 million of the Core Bond Fund’s losses was due to poor market performance, the news report said. Attorney General John Kroger noted that the 65% recovery is much higher than the average recovery for securities class-action cases.

Other states that have also lost money in the Core Bond fund include Illinois, New Mexico, Texas, Maine, and Nebraska. Illinois is seeking to recover $77 million for investors in its Bright Start College Savings Program.

OppenheimerFunds did not admit to any wrongdoing.

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