The Markets July 1, 2010

Roth Expansion Drives Increase in IRA Contributions

 

Fidelity Investments said it experienced significant year-over-year increases in IRA contributions and new account openings for Traditional, Roth and Rollover IRA accounts during the first four months of the year. 

 
Reported by
 

Fidelity said this growth was partly driven by Roth IRA conversion activity and the use of Roth IRAs as a savings vehicle. Roth IRA account openings rose 89% in 2010 when compared with 2009. 

“With income limits now removed for Roth IRA conversions, investors are reexamining the Roth IRA as a potential strategy within their overall retirement savings plan,” said Ken Hevert, vice president, Fidelity Investments, in a press release. 

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Data for IRA accounts held at Fidelity also showed the number of investors who contributed to their IRAs was up across all account types. Roth and Rollover IRA contributions were up more than 14% and Traditional IRA up more than 6%. 

Average IRA contribution amounts increased more than 9% over the same time frame in 2009, to nearly $3,700 in 2010. 

Fidelity said it offers several IRA educational tools for investors on Fidelity.com/IRA to help investors navigate market fluctuations, legislative changes and changing needs based on their life stage. 

  

 
Compliance July 1, 2010

WV Investment Adviser Admits to Embezzling 401(k) Money

A former investment adviser from Charleston, West Virginia, has admitted in federal court that he embezzled $600,000 from a 401(k) plan under his supervision.

 
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The Charleston Gazette reports that Knox Harwell Fuqua pleaded guilty to misappropriating funds from the 401(k) plan of Community Health Systems Inc. in 2005. Fuqua said that in June 2005, he liquidated $500,000 of the plan’s assets then transferred $600,000 to a bank account opened by him in the company’s name.  

He then used the money to buy two $300,000 certificates of deposit in the name of “Fixed Income Funds, Knox Fuqua-President,” and using the certificates of deposit as collateral, opened a $600,000 line of credit under the name “Fixed Income Fund LLC,” according to the news report. Fuqua admitted that he transferred the $600,000 to the account of another client that wanted to cash out its own investment with Fuqua.  

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Fuqua’s sentencing is September 28, and he faces up to five years in prison and possible restitution of up to $600,000.  

In 2006, the Securities and Exchange Commission filed a civil lawsuit against Fuqua, alleging that he funneled clients’ funds into an account that he controlled, then siphoned the money to pay for business and personal expenses. Fuqua reportedly used clients’ assets to pay his supermarket, pharmacy and jewelry store bills, and to buy a rental property, purportedly as an investment for his clients, the news report said.  

In 2007, a federal judge issued a consent order barring Fuqua and his company from serving Employee Retirement Income Security Act plans (see West Virginia Adviser Barred from ERISA Work). 
 
 

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