Ready to consolidate at Fidelity -- any gotchas about transfers?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
3spots
Posts: 84
Joined: Mon Apr 03, 2017 3:54 pm

Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by 3spots » Fri Apr 28, 2017 9:28 am

I have $1M in individual stocks and $1M in 401k/IRA that I want to consolidate. The stocks are all at eTrade. The 401k/IRA are at 5 different custodians. Are there any gotchas about making this happen?

1. Is it better to change asset allocation/funds before the transfer or after?
2. Does custodian-to-custodian transfer trigger any income/tax issues?
3. Is there a fee for closing accounts? How is that charged and collected?
4. Can a cash account (Etrade) be moved, or should I move that to my savings bank first?
5. Is there an issue with having too much at one custodian?
6. One 401K is eligible for a NUA -- I believe that needs to be done before a rollover. I will have zero income this year, so I want to do this or a Roth conversion.
7. How do all the transfer bonuses work -- seems like many overlapping. Would I be eligible for more bonuses if I transferred piecemeal? (must be some fine print somewhere or else everyone would do this?)
8. Will the cost basis transfer as well?
9. is it best to do one account at a time and make sure it clears, or can I initiate all at once?

I am sure there are more questions, but these are the first ones!

3Spots

livesoft
Posts: 58303
Joined: Thu Mar 01, 2007 8:00 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by livesoft » Fri Apr 28, 2017 9:34 am

Why not walk into your local Fidelity office and ask these questions? With you bringing in a multimillion dollar portfolio they should wait on you hand and foot.
This signature message sponsored by sscritic: Learn to fish.

radiowave
Posts: 1373
Joined: Thu Apr 30, 2015 5:01 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by radiowave » Fri Apr 28, 2017 9:47 am

I had a similar issue a few years ago . . . I remember it was 8 different accounts. Fidelity worked flawlessly and they were very helpful in all the transfer paperwork, even got on the phone with a 3 way call multiple times to work out the custodian to custodian transfer. I did one account at a time just because I wanted to keep a close eye on everything. I recall only 1 or 2 accounts charged a fee (one was Edward Jones). Fidelity reimbursed all the fees and gave me a reward/incentive payment of a few hundred. Some of the transfers required a gold medallion signature and the local Fidelity office took care of that - they have a courier service so don't need to mail those in. All together, the process took several months, almost a year. Be sure to get your taxable allocations right the first time due to capital gains implications and use the rollover IRA for adjustments. I wound up using the Fidelity Solo 401k for my prior work 401k/a and 403b. It took a little bit extra work but was worth the effort.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

User avatar
HueyLD
Posts: 5346
Joined: Mon Jan 14, 2008 10:30 am

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by HueyLD » Fri Apr 28, 2017 9:57 am

livesoft wrote:Why not walk into your local Fidelity office and ask these questions? With you bringing in a multimillion dollar portfolio they should wait on you hand and foot.
Not everyone lives in a city big enough to have a Fidelity office.

However, it is a good idea to go to a local office (if there is one) and let a Fidelity rep help you with the paperwork. For the amount involved, you will also receive a transfer bonus.

retiredjg
Posts: 31146
Joined: Thu Jan 10, 2008 12:56 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by retiredjg » Fri Apr 28, 2017 10:12 am

3spots wrote:I have $1M in individual stocks and $1M in 401k/IRA that I want to consolidate. The stocks are all at eTrade. The 401k/IRA are at 5 different custodians. Are there any gotchas about making this happen?

1. Is it better to change asset allocation/funds before the transfer or after?
2. Does custodian-to-custodian transfer trigger any income/tax issues?
3. Is there a fee for closing accounts? How is that charged and collected?
4. Can a cash account (Etrade) be moved, or should I move that to my savings bank first?
5. Is there an issue with having too much at one custodian?
6. One 401K is eligible for a NUA -- I believe that needs to be done before a rollover. I will have zero income this year, so I want to do this or a Roth conversion.
7. How do all the transfer bonuses work -- seems like many overlapping. Would I be eligible for more bonuses if I transferred piecemeal? (must be some fine print somewhere or else everyone would do this?)
8. Will the cost basis transfer as well?
9. is it best to do one account at a time and make sure it clears, or can I initiate all at once?

I am sure there are more questions, but these are the first ones!

3Spots
Some of your questions don't really have an answer because it will vary among those 5 custodians.

There should not be any tax issues if you are transferring from one tax-advantged account to another tax-advantaged account unless you do a Roth conversion. There will be tax issues if you sell something in an ordinary taxable account and move cash. If you move in-kind, there should not.

Some may charge fees to close accounts. Fidelity may reimburse you for this. They may not.

Too much at one custodian is a matter of opinion. Some like to split things up. Others do not.

Find out about your cost basis before each transfer. Older ones may not transfer automatically - get your info before you leave that custodian.

I might do one or two at a time so that if cash is being transferred, all the money won't be out of the market at one time. Also I would find it less confusing. Others might choose a different path.

User avatar
Tyler Aspect
Posts: 666
Joined: Mon Mar 20, 2017 10:27 pm
Location: California
Contact:

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by Tyler Aspect » Fri Apr 28, 2017 6:03 pm

I have Vanguard and Fidelity accounts. I deliberately did it that way so that no single entity knows my entire holdings.

I think Vanguard's mutual fund selections are better compared to Fidelity, but if you restrict to the standard indexes then Fidelity is just as good.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

veggivet
Posts: 234
Joined: Sun Jan 25, 2015 1:07 pm
Location: New England

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by veggivet » Fri Apr 28, 2017 6:08 pm

I transferred multiple accounts from TD Ameritrade to Fidelity in the same ballpark as yours and found the process to be very smooth. My cost basis was transferred accurately, and my incentive bonuses were credited very quickly. If you get hit with any closing fees, I am sure Fidelity will cover them for you.

User avatar
AllieTB1323
Posts: 150
Joined: Tue Mar 24, 2015 10:17 am
Location: Desert Washington State

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by AllieTB1323 » Fri Apr 28, 2017 6:22 pm

A few years ago we moved a taxable account from RBC to Fidelity. No problem. It was painless; they did all the work.

daveydoo
Posts: 1024
Joined: Sun May 15, 2016 1:53 am

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by daveydoo » Fri Apr 28, 2017 6:40 pm

3spots wrote:Are there any gotchas about making this happen?
I have found that it is better to pull than to push. Tell Fidelity what you have, where it is, and let them direct you. The original custodians are not likely to be super-responsive in my experience. Imo, it's easiest to move "in kind," provided they are vanilla securities. If they are proprietary share classes (e.g., Janus funds held at Janus), you may need to sell, or they may be assigned a more portable share class upon transfer. If you plan on doing a lot of selling as part of this whipping-things-into-shape exercise, figure out where it's most cost-effective to do so (i.e., before or after the transfer).

No tax advice here but I'd make sure that this is an IRA-to-IRA transition. Fidelity probably won't let you mess this up, if you're working from that side. If the taxable stuff moves "in kind," then there are no tax implications. But establish this fact first since there could be a nasty surprise. (I've had things sold in this process that I didn't think would be sold.) If there are taxable pieces with a lot of accrued capital gains and if you can not move them in kind, it may be best to just leave them there forever (depending upon your age) or to spend them down by gifting them annually in lieu of your usual charitable cash contributions.

User avatar
aj76er
Posts: 414
Joined: Tue Dec 01, 2015 11:34 pm
Location: Portland, OR

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by aj76er » Fri Apr 28, 2017 7:53 pm

If you call Fidelity, they are very accommodating and handle all the paper work. I recently did this earlier in the year and everything went through flawless. Cost basis was correct.

The only (minor) taxable transaction that occurred was a transfer from Vanguard in which a fractional ETF shares don't transfer over (Fidelity automatically sold it, but it only amounted to ~ $100).

Afterwards, there was a small mutual fund holding that I forgot about, and I was able to do that one myself through Fidelity's website (it as a small amount).

Also, be sure to ask for extras (free trades, bonuses, etc.)
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

User avatar
Earl Lemongrab
Posts: 3376
Joined: Tue Jun 10, 2014 1:14 am

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by Earl Lemongrab » Sat Apr 29, 2017 3:23 pm

You definitely want to investigate any bonuses.

https://rewards.fidelity.com/offers/depositbonus

Also request free trades if you have stocks to divest. As I recall, Fidelity also allows selling mutual funds without fees.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

radiowave
Posts: 1373
Joined: Thu Apr 30, 2015 5:01 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by radiowave » Sat Apr 29, 2017 3:41 pm

Earl Lemongrab wrote:You definitely want to investigate any bonuses.

https://rewards.fidelity.com/offers/depositbonus

Also request free trades if you have stocks to divest. As I recall, Fidelity also allows selling mutual funds without fees.

+1, I had several different funds I moved in kind to Fidelity and did not incur any fees for selling these funds or investing in the Fidelity index funds.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

ChicagoSparty
Posts: 36
Joined: Tue Mar 29, 2016 8:05 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by ChicagoSparty » Sat Apr 29, 2017 4:20 pm

veggivet wrote:I transferred multiple accounts from TD Ameritrade to Fidelity in the same ballpark as yours and found the process to be very smooth. My cost basis was transferred accurately, and my incentive bonuses were credited very quickly. If you get hit with any closing fees, I am sure Fidelity will cover them for you.
If you don't mind me asking what led you to transfer from TD Ameritrade to Fidelity? I currently have a ROTH & Rollover IRA with TD (only holding VTI, VEU, and BND). I have been thinking about switching to Schwab or Fidelity due to their checking account/credit card options that would be available with the accounts. So far I have been pretty happy with TD, which makes me hesitant to switch.

User avatar
SpringMan
Posts: 5321
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by SpringMan » Sat Apr 29, 2017 4:43 pm

I closed an e*trade account and at the time there was a $60 account closing fee. Fidelity reimbursed the fee but talk to them first to verify. Be careful not to create an unplanned taxable event. Stocks should transfer in-kind. Fidelity will undoubtedly offer some free trades but Fidelity has recently lowered their trading fee to $4.95 anyway. Fidelity will advise you regarding mutual funds allowed to transfer in-kind.
Best Wishes, SpringMan

*3!4!/5!
Posts: 1256
Joined: Fri Sep 02, 2016 1:47 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by *3!4!/5! » Sat Apr 29, 2017 5:00 pm

I had major problems moving funds from a TIAA 403b to a Fidelity 403b. Fidelity totally screwed up and I lost thousands. Fidelity is an absolutely atrocious company to deal with.

User avatar
patriciamgr2
Posts: 780
Joined: Mon Nov 19, 2007 3:06 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by patriciamgr2 » Sat Apr 29, 2017 6:08 pm

I transferred several accounts from Vanguard to Fidelity. The Client Services Group assigned to me handled all of the paperwork. The one glitch came from inadvertent mistake by Vanguard.

Fidelity fixed that quickly. I received cash bonuses. The customer service was absolutely excellent.

grok87
Posts: 7620
Joined: Tue Feb 27, 2007 9:00 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by grok87 » Sat Apr 29, 2017 8:20 pm

so i would be cautious about those transfer bonuses for rollover iras and the like. I recently transferred an ira to fido. i asked if they could give me a check for the transfer bonus. they said no that it had to go into the ira account. that sort of freaked me out as i figured it would somehow count as a non-deductible contribution and i was adamant about not contaminating my ira.

they tried to reassure me but ultimately told me to check with tax advisor. not a good story in my book.
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

User avatar
Earl Lemongrab
Posts: 3376
Joined: Tue Jun 10, 2014 1:14 am

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by Earl Lemongrab » Sat Apr 29, 2017 11:19 pm

grok87 wrote:so i would be cautious about those transfer bonuses for rollover iras and the like. I recently transferred an ira to fido. i asked if they could give me a check for the transfer bonus. they said no that it had to go into the ira account. that sort of freaked me out as i figured it would somehow count as a non-deductible contribution and i was adamant about not contaminating my ira.
I get all of my IRA bonuses into the account. That's what you want. They designate them as earnings in some fashion so that they aren't contributions.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

grok87
Posts: 7620
Joined: Tue Feb 27, 2007 9:00 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by grok87 » Sat Apr 29, 2017 11:22 pm

Earl Lemongrab wrote:
grok87 wrote:so i would be cautious about those transfer bonuses for rollover iras and the like. I recently transferred an ira to fido. i asked if they could give me a check for the transfer bonus. they said no that it had to go into the ira account. that sort of freaked me out as i figured it would somehow count as a non-deductible contribution and i was adamant about not contaminating my ira.
I get all of my IRA bonuses into the account. That's what you want. They designate them as earnings in some fashion so that they aren't contributions.
thanks
that's what they told me, but i didn't and don't believe it.
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

User avatar
Earl Lemongrab
Posts: 3376
Joined: Tue Jun 10, 2014 1:14 am

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by Earl Lemongrab » Sat Apr 29, 2017 11:28 pm

grok87 wrote:that's what they told me, but i didn't and don't believe it.
What don't you believe? I guarantee that the ones I have used, including Fidelity, don't report the bonus as a contribution. If they did, then people who weren't eligible for a contribution would have a problem. If the custodian doesn't send a 5498 to the IRS, then it isn't a contribution.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

grok87
Posts: 7620
Joined: Tue Feb 27, 2007 9:00 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by grok87 » Sun Apr 30, 2017 3:25 pm

Earl Lemongrab wrote:
grok87 wrote:that's what they told me, but i didn't and don't believe it.
What don't you believe? I guarantee that the ones I have used, including Fidelity, don't report the bonus as a contribution. If they did, then people who weren't eligible for a contribution would have a problem. If the custodian doesn't send a 5498 to the IRS, then it isn't a contribution.
thanks- it's a good point about some people not being eligible for a contribution.
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

3spots
Posts: 84
Joined: Mon Apr 03, 2017 3:54 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by 3spots » Tue May 02, 2017 10:36 am

Thank you all for your comments and perspectives -- I've got a list now, and will definitely do a pull if I can.

One comment about not having one custodian as they would know total assets -- is that a big concern? I figured that as long as the total amount was insured, then there would be no issues only using one custodian. I suppose if you use two or more you have access to another opinion and another set of tools?

3spots

GMT-8
Posts: 123
Joined: Fri Mar 26, 2010 5:11 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by GMT-8 » Tue May 02, 2017 10:52 am

It's not a big concern to some, but it is to others. It depends on the level of privacy (or paranoia) that seems appropriate to you.

For instance, the software tools that allow you to see all your holdings at once, which mean you have to enter all your other custodians, the sign-on info, etc in exchange for a consolidated view - I'd never do that in a million years. But that's me. Your viewpoint may vary.

Cheers

GMT-8

Church Lady
Posts: 320
Joined: Sat Jun 28, 2014 7:49 pm

Re: Ready to consolidate at Fidelity -- any gotchas about transfers?

Post by Church Lady » Wed May 03, 2017 10:47 am

One comment about not having one custodian as they would know total assets -- is that a big concern? I figured that as long as the total amount was insured, then there would be no issues only using one custodian.
Well, if someone hacks into your account and takes it all, you'd be broke, wouldn't you? If you have two brokers, you'd have the second account to fall back on. Hopefully, you'd have some recourse with Fidelity, but who knows how long that would take or how successful that would be?

Years ago, the local news had a story of a margin account that was hacked. The hacker margined his securities, then transferred the cash and securities to his own account! The broker told the victim tough luck about the lost securities, and by the way you owe us for the margin loan!

This victim would have been totally screwed except he called the local news station. Their investigation showed the broker accepted the transfer without the proper paperwork, so he was made whole. But how long was this guy without his money? (BTW, I don't think the story mentioned the broker's name.)

Just saying!
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

Post Reply