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Why would an employer 401(k) plan prevents Roth assets from being exchanged into the SDBO Self-Directed Brokerage Option (SDBO)?

Personal Finance & Money Asked on July 15, 2021

A Self-Directed Brokerage Option (SDBO) allows 401(k) plan holders to invest their 401(k) money directly into U.S. Equities, ADRs, ETFs, Publicly-traded Limited Partnerships, Publicly-traded REITs, U.S. Treasury Securities, Corporate Bonds, Mortgage-backed Securities, CDs, Mutual funds not already offered in 401(k) Core lineup, and so on.

I read in a Vanguard 401(k) plan customized to some firm based in the United States:

  • The only permitted sources for exchange into the SDBO are pre-tax sources.
  • Your plan restricts Roth assets to be exchanged into the SDBO.

Why would an employer 401(k) plan prevents Roth assets from being exchanged into the Self-Directed Brokerage Option (SDBO)?

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