Any downside to a Fidelity i401k?

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new2bogle2
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Any downside to a Fidelity i401k?

Post by new2bogle2 »

I am about to open an individual/solo 401k account and I read some good things about fidelity.
I do not have any other company 401k which needs to be rolled over and for the foreseeable future, I won't need to back door Roth. I inest in a typical Bogle style 3 fund portfolio in my Roth @ VG and plan to do the same in my i401k so it's most important that I choose a place where I can continue or closely mimic my VG 3Fund portfolio with the lowest possible ER/fees.

I trust many voices on this forum so i would appreciate anyone who could offer me help/direction before I open this account. Thanks.
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Re: Any downside to a Fidelity i401k?

Post by placeholder »

As of this thread Fidelity did not offer a Roth i401k so if that's important then you should check to see if that is still the case:
http://www.bogleheads.org/forum/viewtop ... 1&t=127182
niceguy7376
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Re: Any downside to a Fidelity i401k?

Post by niceguy7376 »

Do they rollover a SEP or SIMPLE or Trad IRA is something that you might need to know for future planning.
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TheTimeLord
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Re: Any downside to a Fidelity i401k?

Post by TheTimeLord »

Thanks to this forum I discovered solo 401ks and mine is with Fidelity and I have been very pleased.
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retiredjg
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Re: Any downside to a Fidelity i401k?

Post by retiredjg »

Sounds like what you really want is a Vanguard Solo401k.

A lot of people are choosing Fidelity because they can roll an IRA into it and Vanguard does not allow that. But that does not seem to be an issue for you. If you want Vanguard funds, why not use Vanguard?

Or maybe you already checked and Fido is cheaper or something?
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Re: Any downside to a Fidelity i401k?

Post by placeholder »

It should be noted that Vanguard i401k plans do not provide Admiral or ETF shares.
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new2bogle2
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Re: Any downside to a Fidelity i401k?

Post by new2bogle2 »

placeholder wrote:It should be noted that Vanguard i401k plans do not provide Admiral or ETF shares.
I read this, does fidelity offer similar index funds with a lower ER/fees?
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retiredjg
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Re: Any downside to a Fidelity i401k?

Post by retiredjg »

Fido offers the Spartan index funds which are very similar to the basic Vanguard funds we usually discuss. There is some difference in the Global except US (no small caps) but that fund is certainly adequate if you are at Fido.

There is a cheaper class of these funds similar to the Admiral funds, but I do not know if those are offered in the 401k plan.

https://www.fidelity.com/mutual-funds/i ... y-fidelity
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TheTimeLord
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Re: Any downside to a Fidelity i401k?

Post by TheTimeLord »

retiredjg wrote:Fido offers the Spartan index funds which are very similar to the basic Vanguard funds we usually discuss. There is some difference in the Global except US (no small caps) but that fund is certainly adequate if you are at Fido.

There is a cheaper class of these funds similar to the Admiral funds, but I do not know if those are offered in the 401k plan.

https://www.fidelity.com/mutual-funds/i ... y-fidelity
They also offer commission freee iShares. And from my experience with both Vangaurd and Fidelity, Fidelity has better customer service and website.

https://www.fidelity.com/etfs/ishares
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Re: Any downside to a Fidelity i401k?

Post by placeholder »

If using ETFs then I would suggest looking at TD Ameritrade (not sure what plan features they support) as they have a good selection of commission free offerings including many Vanguard and iShares products.
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retiredjg
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Re: Any downside to a Fidelity i401k?

Post by retiredjg »

So we've all suggested different places and different things....but the answer to your primary question is that there probably is no downside to a Fidelity i 401k other than you can't buy Vanguard mutual funds at Fido without a transaction fee for each purchase/sale.

The Fidelity Spartan mutual funds and the iShares ETFs are both reasonable substitutes that you can purchase with no transaction fees (assuming they don't have special rules for the i401k plans).
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Re: Any downside to a Fidelity i401k?

Post by Spirit Rider »

new2bogle2 wrote:
placeholder wrote:It should be noted that Vanguard i401k plans do not provide Admiral or ETF shares.
I read this, does fidelity offer similar index funds with a lower ER/fees?
Fidelity has Investor Class and Advantage Class index funds. Both of them are available in a Solo 401k. For example, total stock market.

Fidelity Spartan Total Market: Investor Class is 0.10%/$500 min and Advantage Class is 0.05%/$10K min.
Vanguard Total Stock Market: Investor Shares is 0.17%/$3000/min and Admiral Shares is 0.05%/$10K min.

Fidelity has a lower minimum and expense ratio for Investor. They both have the same expense ratios and minimums for Advantage/Admiral. However, as placeholder stated Vanguard does not yet allow Admiral Shares in Solo 401k plans.

As noted Fidelity does allow IRA rollovers, but does not have a Roth Option.
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new2bogle2
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Re: Any downside to a Fidelity i401k?

Post by new2bogle2 »

placeholder wrote:If using ETFs then I would suggest looking at TD Ameritrade (not sure what plan features they support) as they have a good selection of commission free offerings including many Vanguard and iShares products.
Am I correct that the funds still have the same ER that VG sets, even if they are purchased (commission free)? Or does TD Amer let you purchase the admiral shares??
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retiredjg
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Re: Any downside to a Fidelity i401k?

Post by retiredjg »

TD Ameritrade does not sell Vanguard mutual funds without a commission. The do sell Vanguard ETFs without a commission (last I saw the list). The expense ratio would be the same as at Vanguard.
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Re: Any downside to a Fidelity i401k?

Post by placeholder »

Also generally you can't get Vanguard index Admiral funds at other brokerages which is why some of us like ETFs because they have similar ERs and can be held anywhere.
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Re: Any downside to a Fidelity i401k?

Post by new2bogle2 »

placeholder wrote:Also generally you can't get Vanguard index Admiral funds at other brokerages which is why some of us like ETFs because they have similar ERs and can be held anywhere.
what is the ER of the Total Market ETF from VG if purchased through TD Am? anyone know off hand?
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Re: Any downside to a Fidelity i401k?

Post by LeeMKE »

We have a Solo 401K with Fidelity and have found no downside.

We use the least expensive Spartan funds with $10K minimum for each.

Love Fidelity and the transparency of their tools.
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Re: Any downside to a Fidelity i401k?

Post by placeholder »

new2bogle2 wrote:what is the ER of the Total Market ETF from VG if purchased through TD Am? anyone know off hand?
https://personal.vanguard.com/us/funds/ ... IntExt=INT
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retiredjg
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Re: Any downside to a Fidelity i401k?

Post by retiredjg »

placeholder wrote:
new2bogle2 wrote:what is the ER of the Total Market ETF from VG if purchased through TD Am? anyone know off hand?
https://personal.vanguard.com/us/funds/ ... IntExt=INT
I think the ETF would be .05%. The ER is built into the investment. It does not change depending on where you buy it. The ER of different share classes can vary though.

https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: Any downside to a Fidelity i401k?

Post by ruralavalon »

new2bogle2 wrote:
placeholder wrote:It should be noted that Vanguard i401k plans do not provide Admiral or ETF shares.
I read this, does fidelity offer similar index funds with a lower ER/fees?
Yes Fidelity offers Spartan Advantage shares of very similar total market type index index funds, with lower expense ratios than Vanguard's Investor class shares, the exception being Fidelity doesn't have a Total International which covers small caps (a relatively minor difference).

I am a huge Vanguard fan, but would use Fidelity for a solo 401k to use their Spartan Advantage shares.
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Re: Any downside to a Fidelity i401k?

Post by SGM »

Prior to retirement I had a solo 401k with Fidelity. I used Vanguard ETFs mostly. This meant that some money would be in cash or in a Fidelity fund. I prefer Vanguard, but fifteen years ago Vanguard required third party involvement to set up the solo 401k. As of a few months ago there was no Roth 401k option at Fidelity. When I closed the solo 401k there was a $50 fee. Rollover to an IRA outside of Fidelity was not difficult. I did this twice. Broker to broker was easy but took a long phone call. Using a paper method and taking the money as cash and rolling it over yourself required withholding taxes of 10 or 15% taken out by Fidelity. So you need to come up with the cash to make up for the withholding. If you receive cash you have to be concerned about time limits which I think are 90 days.

I was told by a Fidelity employee that I could only have one solo 401k which was not true. I did receive two cold calls from a Fidelity salesman trying to get me to put taxable money in an inappropriate equity index annuity. This angered me, but the calls stopped shortly when I made it clear I was not interested.
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Re: Any downside to a Fidelity i401k?

Post by TheTimeLord »

SGM wrote:Prior to retirement I had a solo 401k with Fidelity. I used Vanguard ETFs mostly. This meant that some money would be in cash or in a Fidelity fund. I prefer Vanguard, but fifteen years ago Vanguard required third party involvement to set up the solo 401k. As of a few months ago there was no Roth 401k option at Fidelity. When I closed the solo 401k there was a $50 fee. Rollover to an IRA outside of Fidelity was not difficult. I did this twice. Broker to broker was easy but took a long phone call. Using a paper method and taking the money as cash and rolling it over yourself required withholding taxes of 10 or 15% taken out by Fidelity. So you need to come up with the cash to make up for the withholding. If you receive cash you have to be concerned about time limits which I think are 90 days.

I was told by a Fidelity employee that I could only have one solo 401k which was not true. I did receive two cold calls from a Fidelity salesman trying to get me to put taxable money in an inappropriate equity index annuity. This angered me, but the calls stopped shortly when I made it clear I was not interested.
A few people here have mentioned cold calls from Fidelity which is interesting because I have never received one. In fact I received my first call from Fidelity and my account exec's assistant yesterday. She indicated support had passed on that I was looking at depositing funds ro take advantage of their AA miles offer and was wondering if she could answer any questions. I told him I was fine but had been told to wait until December so I would get full credit since I had withdrawn some funds recently. She is suppose to get back with me Monday to see if they can waive that requirement. I could only hope someday Vanguad would have that kind of communication and service between reps. I do get emails on products and webinars on a regular basis but that is hopw I prefer to be contacted about those things.

Also are you saying you can have multiple Solo 401Ks for a single company?
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new2bogle2
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Re: Any downside to a Fidelity i401k?

Post by new2bogle2 »

ruralavalon wrote:
new2bogle2 wrote:
placeholder wrote:It should be noted that Vanguard i401k plans do not provide Admiral or ETF shares.
I read this, does fidelity offer similar index funds with a lower ER/fees?
Yes Fidelity offers Spartan Advantage shares of very similar total market type index index funds, with lower expense ratios than Vanguard's Investor class shares, the exception being Fidelity doesn't have a Total International which covers small caps (a relatively minor difference).

I am a huge Vanguard fan, but would use Fidelity for a solo 401k to use their Spartan Advantage shares.
Thank you for the good information.
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