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Products April 20, 2011
TD Ameritrade Launches ETF Offering for 401(k)s
TD Ameritrade Trust Company created an investment program that allows plan sponsors and independent registered
investment advisers (RIAs) to offer exchange-traded funds (ETFs) to
401(k) plan participants.
Reported by Rebecca Moore
Legacy 401(k) recordkeeping and accounting systems are not designed to accommodate ETFs, which trade throughout the day and can only be traded in whole shares. To overcome these hurdles, TD Ameritrade attempted to simplify operations for recordkeepers by developing a trading process that mirrors mutual fund trading and is consistent with their current procedures. This process also includes the ability to trade fractional shares of ETFs.
In addition, per-share fees and transaction fees are eliminated for 401(k) plans on the TD Ameritrade Trust Company platform, which can provide potential cost savings to plan participants and eliminate the reconciling component for recordkeepers. Another key feature of the platform is its open architecture, which allows advisers and plans sponsors to select ETFs from multiple providers.
“We expect the ETF market will continue to grow and by facilitating their use in retirement plans, TD Ameritrade Trust Company aims to drive down costs in the industry and further our commitment to providing advisers, plan sponsors and participants the choice and flexibility they need to help their clients achieve their retirement investing goals,” said Skip Schweiss, president, TD Ameritrade Trust Company.