Worth moving existing i401k from Vanguard elsewhere?

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BogleFanGal
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Worth moving existing i401k from Vanguard elsewhere?

Post by BogleFanGal » Mon Oct 09, 2017 9:43 am

Have an existing i401k at Vanguard for last 8 yrs- at the time, easiest/most convenient to keep where my other investments are. The lack of admiral funds always bothered me, but not enough to switch. Now that I've shifted from mostly equities to bonds (as part of an intentional downshift in AA close to retirement), it has me even more concerned about that .15 vs .05 ER gap. Have about $175k there, with a year or two more of contributions, I'm guessing.

1. How much hassle is it to change providers on an existing plan? When I asked Fidelity, they said I'd have to open a new acct , complete transfer of assets, then amend plan documents. I'd need to talk to their retirement team "about the entire process".

2. Are there any rumors/rumblings at all about Vanguard allowing Admiral in i401ks at some point? I'd hate to switch, just to find out they later amend their policy, as I'd rather keep it at Vanguard and Fidelity will charge $50 to close & switch it back.

I have a full plate in life right now and feeling a bit overwhelmed. I'm tempted to take the lazy way out and just leave it at V. Would I be making a big mistake?

DSInvestor
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by DSInvestor » Mon Oct 09, 2017 9:49 am

If limited to Investor shares, you may be able to get a slightly lower overall expense ratio by using a Target Retirement or Lifestrategy fund that most closely matches your desired asset allocation.

Target Retirement 2020 VTWNX er=0.14%
Target Retirement 2015 VTXVX er=0.14%
LifeStrategy Conservative Growth VSCGX er=0.13%

Total Stock Market Investor VTSMX er=0.15%
Total International Stock Market Investor VGTSX er=0.18%
Total Bond Market Investor VBMFX er=0.15%
Wiki

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telemark
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by telemark » Mon Oct 09, 2017 9:54 am

10 basis points is at worst a small mistake. This is noise level stuff.

aristotelian
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by aristotelian » Mon Oct 09, 2017 10:57 am

Fidelity does not allow electronic contributions, apparently. Depending on the amount in the account, it is possible that the cost of stamps, envelopes, and checks will be more than the .1% extra you will be paying at Vanguard. In any case, that would be a dealbreaker for me.

Have you looked at Schwab? If my balance was over $100k, I would probably go through with the switch to save $100 annually.

Spirit Rider
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by Spirit Rider » Mon Oct 09, 2017 12:26 pm

BogleFanGal wrote:
Mon Oct 09, 2017 9:43 am
1. How much hassle is it to change providers on an existing plan? When I asked Fidelity, they said I'd have to open a new acct , complete transfer of assets, then amend plan documents. I'd need to talk to their retirement team "about the entire process".
Actually, it is a little easier and partially backwards from what they told you. Here are the steps the last I knew:
  1. You adopt and amend the plan in one step by downloading/completing Fidelity's Self-Employed 401(k) Adoption Agreement. Instead of indicating it is a new plan, you indicate that this is an amendment from another plan document, the effective date and enter the original effective date of your current plan.
  2. You open a Self-Employed 401k account by downloading/completing Fidelity's Retirement Plan Account application and indicate you want a new SE 401(k) Plan account.
  3. You then do a direct rollover from your Vanguard i401k to your Fidelity SE 401k.
  4. Note: This confused me at first, but you are only closing the Vanguard account. As far as the IRS is concerned this is the same plan, just amended to a new plan document and moved to a new custodian. You don't do anything with the IRS at all.
2. Are there any rumors/rumblings at all about Vanguard allowing Admiral in i401ks at some point? I'd hate to switch, just to find out they later amend their policy, as I'd rather keep it at Vanguard and Fidelity will charge $50 to close & switch it back.
I think it is unlikely. Vanguard's corporate mission is to minimize costs to the underlying funds. They have stated repeatedly that the higher expenses ratios of the Investor Shares are necessary to cover the administrative expenses of i401k plans. Never say never, but that has been recently expressed by Vanguard CSRs. Of course they are probably the last to know.

P.S. You most definitely need to talk to a Fidelity Retirement specialist, rather than relying on some anonymous guy on the internet.

Spirit Rider
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by Spirit Rider » Mon Oct 09, 2017 12:35 pm

aristotelian wrote:
Mon Oct 09, 2017 10:57 am
Fidelity does not allow electronic contributions, apparently.
You are correct, they don't allow ACH transfers to the SE 401k account.

However, there is an easy workaround. You open a no minimal balance cash management account in the same business name as the SE401k. Make an ACH transfer request by 4pm ET and it will be there the next morning and then you can call and immediately transfer the funds to the SE 401k account.

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BogleFanGal
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by BogleFanGal » Tue Oct 10, 2017 11:12 am

Thanks to everyone for your input and suggestions. Interesting that life strategy and other blended funds have a slightly lower ER than the plain vanilla total bond fund.

May explore Schwab - know very little about what they offer. Fidelity seems to be recommended so often on the boards and their bond ERs match low Vanguard admiral rates. I have to believe they're going to offer an online transaction option eventually - they keep saying "they're looking into it" as people continue asking about it on their site. (That wouldn't be a big deal breaker anyhow, given that I probably won't be contributing much longer.)

docbrown
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by docbrown » Tue Oct 10, 2017 1:30 pm

BogleFanGal wrote:
Mon Oct 09, 2017 9:43 am
Have about $175k there, with a year or two more of contributions, I'm guessing.
If this was me, I would keep the plan at Vanguard for another year or two until I stop contributing, then close the plan and transfer the assets to an IRA and/or Roth IRA as required and switch to Admiral funds then.
Roth was a Senator, not an acronym. Please, stop writing it in all caps.

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JamesSFO
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by JamesSFO » Tue Oct 10, 2017 1:33 pm

I will just add that when we moved from I401K at Vanguard to a "real plan" with a 401K provider, getting the assets successfully out of Vanguard was surprisingly frustrating. Luckily, my Flagship rep was able to help communicate the request since the SmallBiz team kept misunderstanding the requests.

theplayer11
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Re: Worth moving existing i401k from Vanguard elsewhere?

Post by theplayer11 » Tue Oct 10, 2017 1:36 pm

recently transferred SEP IRA from vanguard to schwab and process was fairly smooth....couple hick ups were my fault on the application. I believe assets transferred in less than a week

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