Rollover to Vanguard or Fidelity?

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triyoda
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Rollover to Vanguard or Fidelity?

Post by triyoda » Wed Aug 07, 2019 7:13 pm

I have $180K in a 401K from a job I just terminated which I need to rollover.

I currently have $250k in a rollover with Fidelity and I also have $40k in a regular brokerage with them.

The most simple course of action would be just to roll over to my existing account with Fidelity. However, Fidelity charges $75 fee to buy/sell any Vanguard mutual funds. Is is worth opening a new account with Vanguard to access to all of their funds?

I use an asset allocation model (gone fishing portfolio), so I do not need anything exotic. However, I will divide my US stocks between a Total Market Index and Small cap index, I will divide my international stocks between emerging and developed markets and I also plan to put 5% in a REIT and 5% in a precious metals/gold fund/ETF. So not quite as simple as a 3 fund portfolio, but only slightly more complicated.

Appreciate any suggestions or angles I am missing. I am leaning towards Fidelity just because it will be the least effort and it will consolidate a lot of my assets.

HawkeyePierce
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Re: Rollover to Vanguard or Fidelity?

Post by HawkeyePierce » Wed Aug 07, 2019 7:15 pm

If you want to move it to Fidelity why not just buy Fidelity funds?

HomeStretch
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Re: Rollover to Vanguard or Fidelity?

Post by HomeStretch » Wed Aug 07, 2019 7:22 pm

Are you sure you “have to” move your 401k? Some companies allow former employees to remain in their 401k plans.

You could use Vanguard ETFs at Fidelity. Not sure if trades are free or $4.95.

If you want to hold Vanguard mutual funds, suggest holding them at Vanguard rather than pay $75 per trade fee unless Fidelity will waive the fees.

You could always move all your accounts to Vanguard if you prefer to use one brokerage.

averagedude
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Re: Rollover to Vanguard or Fidelity?

Post by averagedude » Wed Aug 07, 2019 7:32 pm

I believe consolidating all of your holding to one provider is worth the effort. It really simplify's things, which is something you will appreciate as you get older. Both are considered low cost providers and prudent choices.

Bronco Billy
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Re: Rollover to Vanguard or Fidelity?

Post by Bronco Billy » Wed Aug 07, 2019 7:45 pm

HomeStretch wrote:
Wed Aug 07, 2019 7:22 pm
Are you sure you “have to” move your 401k? Some companies allow former employees to remain in their 401k plans.
HomeStretch .. What advantage do you see leaving it in a 401k? I might have missed something but I didn't see that big of benefit leaving it in the 401k.

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Hector
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Re: Rollover to Vanguard or Fidelity?

Post by Hector » Wed Aug 07, 2019 7:50 pm

Vanguard money market funds are better than Fidelity money market funds. Your cash settlement account would earn more at Vanguard for similar cash settlement option.

If you are buying individual bonds, Fidelity has auto-roll, but you have to do it manually at Vanguard.

If you want to change position of individual treasury bond at maturity and buy at auction; for example if you want to roll your 4 week bill into 8 week upon maturity. You can do that at Vanguard without any waiting period. You have to wait for a bit at Fidelity as you can not place an order before fund is available.

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Re: Rollover to Vanguard or Fidelity?

Post by ThriftyPhD » Wed Aug 07, 2019 7:52 pm

Bronco Billy wrote:
Wed Aug 07, 2019 7:45 pm
HomeStretch wrote:
Wed Aug 07, 2019 7:22 pm
Are you sure you “have to” move your 401k? Some companies allow former employees to remain in their 401k plans.
HomeStretch .. What advantage do you see leaving it in a 401k? I might have missed something but I didn't see that big of benefit leaving it in the 401k.
A few things that might be relevant.

Genrally, 401ks have better asset protection than IRAs. Think lawsuits and bankruptcy. IRAs are protected at the state level, 401ks are protected at the federal level through ERISA.

If you are ever at an income level where contributing to a Roth IRA is precluded based on modified adjusted gross income, having a traditional IRA or traditional rollover IRA can prevent a 'Backdoor Roth' procedure. If the money remains in an a 401k, that option is preserved.

Some 401ks have access to funds with lower ERs than are available at retail.

Many people think they 'have to' roll their 401k out once they leave the job. In many cases, they would be better off leaving it in place. I believe if you have more than $5k, they can't force you to roll it out.

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nisiprius
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Re: Rollover to Vanguard or Fidelity?

Post by nisiprius » Wed Aug 07, 2019 8:16 pm

I don't think you're missing anything.

I was in a similar situation, I took the line of least resistance, I rolled over into Fidelity and stayed there for about seven years. I had a Vanguard account at the same time, so I was in a good situation for comparing. I was never tempted to move my Vanguard holdings to Fidelity and I was never tempted to move my Fidelity holdings to Vanguard.

I did not think it is worth paying Fidelity's transaction fees for Vanguard funds. I "made do" with Fidelity's own index funds and, in one case, one of the iShares ETFs they offer commission-free.

I think that Fidelity's own index funds are fine.

Eventually, in the interests of simplification, I decided to consolidate. It was very, very close to a coin-flip; I moved everything to Vanguard, but that was mostly just fan appreciation and brand loyalty.

I am not in favor of keeping 401(k) accounts, for these reasons. Most important, over the course of a career, it creates clutter. Second, both my wife and I have suffered serious annoyances when companies switched 401(k) plans and didn't do perfect recordkeeping. No actual loss, but many phone calls and fussing; for example, my wife, despite trying very hard, was unable to get her 401(k) rolled over directly into her Vanguard account. Long story short, she ended up getting mailed a check... Third, even though I think of myself as a fine-print reader, there were hidden fees in my Fidelity-managed 401(k) account that I had never spotted. Things may have changed, but in my case, I failed to notice that the listed expense ratios for the same share class of the same fund with the same ticker symbol, were slightly higher in my 401(k) plan than in a regular brokerage account.
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HomeStretch
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Re: Rollover to Vanguard or Fidelity?

Post by HomeStretch » Wed Aug 07, 2019 8:22 pm

To add to ThriftyPhD’s list:

1. Possible access to the Vanguard mutual funds you want without trading fees

2. If you were age 55+ when you separated from employer, “rule of 55” would allow penalty-free withdrawals prior to age 59-1/2

Not advocating for 401k or IRA. My main point was that you might not have to move out of the 401k if you didn’t want to.

Bronco Billy
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Re: Rollover to Vanguard or Fidelity?

Post by Bronco Billy » Wed Aug 07, 2019 9:29 pm

HomeStretch wrote:
Wed Aug 07, 2019 8:22 pm
Not advocating for 401k or IRA. My main point was that you might not have to move out of the 401k if you didn’t want to.
Thank you for your input. I was not aware of the Roth point you brought up. I made my decision to get access to more (better) funds, could not add to the 401 and i had to finally remove it when i was required to start taking RMD. They only allowed very few withdrawals.

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triyoda
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Re: Rollover to Vanguard or Fidelity?

Post by triyoda » Wed Aug 07, 2019 11:26 pm

HomeStretch wrote:
Wed Aug 07, 2019 8:22 pm
To add to ThriftyPhD’s list:

1. Possible access to the Vanguard mutual funds you want without trading fees

2. If you were age 55+ when you separated from employer, “rule of 55” would allow penalty-free withdrawals prior to age 59-1/2

Not advocating for 401k or IRA. My main point was that you might not have to move out of the 401k if you didn’t want to.

My current 401K has less than ideal fund options, specifically high (~1%) expense ratio international and bond fund offerings and in both cases, managed, not index funds. So at least for me, leaving it is not a good option. Yes, I could leave it there if I wanted to, but either Vanguard or Fidelity seems like a superior option.

Topic Author
triyoda
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Re: Rollover to Vanguard or Fidelity?

Post by triyoda » Wed Aug 07, 2019 11:32 pm

nisiprius wrote:
Wed Aug 07, 2019 8:16 pm
I don't think you're missing anything.
thank you for this reply. I think I am of the same thinking, I can make Fidelity's index funds (orjust use Vanguard ETFs) work. Therefore by going with Fidelity I save the hassle of opening a new account, with the only downside being lack of reasonable access ($75 fee) to vanguard mutual funds (any ETFs still trade for $4.95)

Is there any specific Vanguard fund (that is open to new investors) that would be compelling enough to get a Vanguard account?

SavageAmusement
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Re: Rollover to Vanguard or Fidelity?

Post by SavageAmusement » Thu Aug 08, 2019 4:42 am

ThriftyPhD wrote:
Wed Aug 07, 2019 7:52 pm
Bronco Billy wrote:
Wed Aug 07, 2019 7:45 pm
HomeStretch wrote:
Wed Aug 07, 2019 7:22 pm
Are you sure you “have to” move your 401k? Some companies allow former employees to remain in their 401k plans.
HomeStretch .. What advantage do you see leaving it in a 401k? I might have missed something but I didn't see that big of benefit leaving it in the 401k.
A few things that might be relevant.

Genrally, 401ks have better asset protection than IRAs. Think lawsuits and bankruptcy. IRAs are protected at the state level, 401ks are protected at the federal level through ERISA.

If you are ever at an income level where contributing to a Roth IRA is precluded based on modified adjusted gross income, having a traditional IRA or traditional rollover IRA can prevent a 'Backdoor Roth' procedure. If the money remains in an a 401k, that option is preserved.

Some 401ks have access to funds with lower ERs than are available at retail.

Many people think they 'have to' roll their 401k out once they leave the job. In many cases, they would be better off leaving it in place. I believe if you have more than $5k, they can't force you to roll it out.
I hear your argument, but I see the situation differently. Personally, I have rolled over my 401k as soon as possible when I’ve left jobs. There are two primary reasons why:

1) Control - I want complete control over my assets without a third party (e.g., my employer) standing between me and the financial institution holding those assets. I don’t want a 401k plan document, company policy, or HR department limiting my control after I’m no longer an employee.

2) Freedom - I want complete freedom to invest in anything I want, wherever I want. With a 401k plan, I’m limited to the funds offered by my employer at the financial institution picked by it. With an IRA, I can invest in almost anything wherever I want.

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ruralavalon
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Re: Rollover to Vanguard or Fidelity?

Post by ruralavalon » Thu Aug 08, 2019 12:15 pm

triyoda wrote:
Wed Aug 07, 2019 11:26 pm
HomeStretch wrote:
Wed Aug 07, 2019 8:22 pm
To add to ThriftyPhD’s list:

1. Possible access to the Vanguard mutual funds you want without trading fees

2. If you were age 55+ when you separated from employer, “rule of 55” would allow penalty-free withdrawals prior to age 59-1/2

Not advocating for 401k or IRA. My main point was that you might not have to move out of the 401k if you didn’t want to.

My current 401K has less than ideal fund options, specifically high (~1%) expense ratio international and bond fund offerings and in both cases, managed, not index funds. So at least for me, leaving it is not a good option. Yes, I could leave it there if I wanted to, but either Vanguard or Fidelity seems like a superior option.
Does your new employer offer a 401k or similar plan (403b, 457b, SIMPLE IRA, TSP)? If so are good low expense funds offered? Will the new employer's plan accept a rollover from your former employer's plan? If so, then you have the option of rolling over your account into your new employer's plan.

Additional considerations include:

1) the convenience of having one fewer account to keep track and manage, if you move the old 401k into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA for higher income individuals, and

4) a 401k allows distributions penalty free starting at age 55 if no longer employed, and has other provisions for withdrawals earlier than age 59.5.

Wiki article, 401k, "Move to new 401k". Wiki article, 401k, ”Rollover to IRA".




triyoda wrote:
Wed Aug 07, 2019 7:13 pm
I have $180K in a 401K from a job I just terminated which I need to rollover.

I currently have $250k in a rollover with Fidelity and I also have $40k in a regular brokerage with them.

The most simple course of action would be just to roll over to my existing account with Fidelity. However, Fidelity charges $75 fee to buy/sell any Vanguard mutual funds. Is is worth opening a new account with Vanguard to access to all of their funds?

I use an asset allocation model (gone fishing portfolio), so I do not need anything exotic. However, I will divide my US stocks between a Total Market Index and Small cap index, I will divide my international stocks between emerging and developed markets and I also plan to put 5% in a REIT and 5% in a precious metals/gold fund/ETF. So not quite as simple as a 3 fund portfolio, but only slightly more complicated.

Appreciate any suggestions or angles I am missing. I am leaning towards Fidelity just because it will be the least effort and it will consolidate a lot of my assets.
Both Fidelity and Vanguard would be good locations for a rollover IRA. My own personal preference is Vanguard. But I agree that its more convenient to have all of your accounts at one fund company.

If at Fidelity I would not pay a transaction fee to buy Vanguard funds. It sounds like Fidelity offers the kinds of index funds you wish to use. Wiki article, Fidelity, "Tools for Boglehead-style investing". Also Fidelity offers iShares ETFs with no transaction fees.

Vanguard has by far the largest selection of low expense traditional mutual funds offered anywhere. Vanguard has by far the largest array of no transaction fee ETFS. In addition to its own ETFs Vanguard offers roughly 1800 commission free ETFs of other firms including those of Schwab, State Street (SPDR) and BlackRock (iShares). Kiplinger (07/02/2018), "Vanguard to Ditch Commissions on Most ETFs". Vanguard offers a small-cap value index fund, but Fidelity does not, which is important if interested in value investing. Vanguard money market funds (including the sweep fund) pay a better return than funds at Fidelity, which is important for investors who desire a significant cash allocation.

There is a lot of personal preference involved in selecting a firm for your accounts.
Last edited by ruralavalon on Thu Aug 08, 2019 12:38 pm, edited 1 time in total.
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ThriftyPhD
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Re: Rollover to Vanguard or Fidelity?

Post by ThriftyPhD » Thu Aug 08, 2019 12:17 pm

SavageAmusement wrote:
Thu Aug 08, 2019 4:42 am
ThriftyPhD wrote:
Wed Aug 07, 2019 7:52 pm
Bronco Billy wrote:
Wed Aug 07, 2019 7:45 pm
HomeStretch wrote:
Wed Aug 07, 2019 7:22 pm
Are you sure you “have to” move your 401k? Some companies allow former employees to remain in their 401k plans.
HomeStretch .. What advantage do you see leaving it in a 401k? I might have missed something but I didn't see that big of benefit leaving it in the 401k.
A few things that might be relevant.

Genrally, 401ks have better asset protection than IRAs. Think lawsuits and bankruptcy. IRAs are protected at the state level, 401ks are protected at the federal level through ERISA.

If you are ever at an income level where contributing to a Roth IRA is precluded based on modified adjusted gross income, having a traditional IRA or traditional rollover IRA can prevent a 'Backdoor Roth' procedure. If the money remains in an a 401k, that option is preserved.

Some 401ks have access to funds with lower ERs than are available at retail.

Many people think they 'have to' roll their 401k out once they leave the job. In many cases, they would be better off leaving it in place. I believe if you have more than $5k, they can't force you to roll it out.
I hear your argument, but I see the situation differently. Personally, I have rolled over my 401k as soon as possible when I’ve left jobs. There are two primary reasons why:

1) Control - I want complete control over my assets without a third party (e.g., my employer) standing between me and the financial institution holding those assets. I don’t want a 401k plan document, company policy, or HR department limiting my control after I’m no longer an employee.

2) Freedom - I want complete freedom to invest in anything I want, wherever I want. With a 401k plan, I’m limited to the funds offered by my employer at the financial institution picked by it. With an IRA, I can invest in almost anything wherever I want.
I wasn't making an argument, I was listing reasons that would be relevant for leaving it. You list some that would suggest rolling it out. My main point was that many people assume they HAVE to roll it out, and this can cause problems. You might lose asset protection depending on your state, or you might lose the ability to do a Backdoor Roth.

If you have a good 401k, leaving it is a very reasonable option. I would suggest the default should be to leave it, unless there is a good reason for rolling it out. High fees would be a good reason for rolling it out. But if the 401k has a quality total market index fund and total bond index fund, it might be worth keeping.

To your second point, my 401k offers index funds for: SP500, Mid Cap, Small Cap, International, Bond, and Vanguard Target Dates. All are at ERs less than the retail market. If I left this job, there's no reason for me to roll anywhere. Anything I would want to invest in is already available, and rolling to an IRA would permanently prevent me from contributing to a Roth through the Backdoor Roth process. An IRA would have tens of thousands of options to invest in, but the 20+ offered in my 401k are more than I need.

Then, you have plans that offer funds that are difficult to get on the retail market. The G fund in the TSP, or DFA funds, for example.

There have been many threads on Bogleheads where someone left a job, rolled their 401k to an IRA, and now are asking how they can do a Backdoor Roth. Had they waited, and left the money in their previous 401k, they might have made a different choice.

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Re: Rollover to Vanguard or Fidelity?

Post by ThriftyPhD » Thu Aug 08, 2019 12:19 pm

triyoda wrote:
Wed Aug 07, 2019 11:26 pm
HomeStretch wrote:
Wed Aug 07, 2019 8:22 pm
To add to ThriftyPhD’s list:

1. Possible access to the Vanguard mutual funds you want without trading fees

2. If you were age 55+ when you separated from employer, “rule of 55” would allow penalty-free withdrawals prior to age 59-1/2

Not advocating for 401k or IRA. My main point was that you might not have to move out of the 401k if you didn’t want to.

My current 401K has less than ideal fund options, specifically high (~1%) expense ratio international and bond fund offerings and in both cases, managed, not index funds. So at least for me, leaving it is not a good option. Yes, I could leave it there if I wanted to, but either Vanguard or Fidelity seems like a superior option.
Given the info about your fund options and expenses, I agree that rolling out is probably a good option. If you have a new job that provides a better 401k, check to see if you can roll the money into your new 401k.

SavageAmusement
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Re: Rollover to Vanguard or Fidelity?

Post by SavageAmusement » Thu Aug 08, 2019 1:51 pm

ThriftyPhD wrote:
Thu Aug 08, 2019 12:17 pm
I would suggest the default should be to leave it, unless there is a good reason for rolling it out.
I would suggest the default position should be to think for yourself. Leaving assets in a 401k may make sense under the limited circumstances you described. Rolling it over makes sense if control and freedom matter to you. Like most financial decisions, there usually isn't one right answer for everyone.

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Re: Rollover to Vanguard or Fidelity?

Post by 123 » Thu Aug 08, 2019 2:36 pm

While it can't hurt to give Vanguard a try it's likely worth it to consolidate things at Fidelity if you hold other accounts there. You can just use the Fidelity equivalents of Vanguard funds and likely get pretty much similar results. The purchase fees at Schwab and Fidelity are high (around $75) for Vanguard mutual funds but we've got some retirement accounts with high balances that are 100% in Vanguard LifeStrategy funds because the AA works for us. Others might use a Vanguard Target Date fund. That fee can be inconsequential on a high-balance account, especially when the position remains undisturbed for years.
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Re: Rollover to Vanguard or Fidelity?

Post by carmonkie » Thu Aug 08, 2019 2:56 pm

How is your Asset Allocation?

I would think, you can use this "old" 401(k) as your bond holder and buy all equities on your "new", taxable and Roth accounts and as time go by use this account to get your AA back on track.
@180K, they will not force you to close or rollover, You can keep it as long as you want and as long as the balance does not fall below 5K.

If your income is high enough that you can't contribute to a Roth, the Traditional IRA is factored in when you try to do a Backdoor Roth IRA conversion, the Pro-Rata rule kicks in to determine how much of the backdoor Rollover is gong to be taxed.

The pro-rata rule. The IRS requires rollovers from traditional IRAs to Roth IRAs to be done pro rata. Here’s how it works: When determining your tax bill on a conversion from a traditional IRA to a Roth IRA, the IRS is going to look at all of your traditional IRA accounts combined. If all of your traditional IRAs combined consist of, say, 70% pre-tax money and 30% after-tax money, that ratio determines what percentage of the money you convert to a Roth is going to be taxable. In this example, no matter how much money you convert or which IRA account you pull the money from, 70% of the amount you convert to the Roth will be taxable. You can’t choose to convert only after-tax money; the IRS won’t allow it. And a word about timing: the IRS applies the pro-rata rule to your total IRA balance at year-end, not at the time of conversion.

Without traditional IRAs, the pro-rata rule does not apply and you only pay taxed on the gains, if all money is kept in Money Market at the time of the rollover, the Rollover can be done almost tax-free and then put to work on your AA and grow tax free.

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Re: Rollover to Vanguard or Fidelity?

Post by ThriftyPhD » Thu Aug 08, 2019 3:59 pm

SavageAmusement wrote:
Thu Aug 08, 2019 1:51 pm
ThriftyPhD wrote:
Thu Aug 08, 2019 12:17 pm
I would suggest the default should be to leave it, unless there is a good reason for rolling it out.
I would suggest the default position should be to think for yourself. Leaving assets in a 401k may make sense under the limited circumstances you described. Rolling it over makes sense if control and freedom matter to you. Like most financial decisions, there usually isn't one right answer for everyone.
If you roll it out, the decision is permanent. If you leave it today, you can roll it out tomorrow. Too many people are under the impression that they have to roll it out, and make a poor financial decision at the same time they are moving, switching jobs, and having other big life changes.

Unless you have a good reason to roll it out, leave it where it is. You can change your mind tomorrow, unless you roll it out today.

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Re: Rollover to Vanguard or Fidelity?

Post by SavageAmusement » Thu Aug 08, 2019 4:13 pm

ThriftyPhD wrote:
Thu Aug 08, 2019 3:59 pm
SavageAmusement wrote:
Thu Aug 08, 2019 1:51 pm
ThriftyPhD wrote:
Thu Aug 08, 2019 12:17 pm
I would suggest the default should be to leave it, unless there is a good reason for rolling it out.
I would suggest the default position should be to think for yourself. Leaving assets in a 401k may make sense under the limited circumstances you described. Rolling it over makes sense if control and freedom matter to you. Like most financial decisions, there usually isn't one right answer for everyone.
If you roll it out, the decision is permanent. If you leave it today, you can roll it out tomorrow. Too many people are under the impression that they have to roll it out, and make a poor financial decision at the same time they are moving, switching jobs, and having other big life changes.

Unless you have a good reason to roll it out, leave it where it is. You can change your mind tomorrow, unless you roll it out today.
I get what you’re saying, I just see it differently. I would flip the suggestion. You should roll It over unless there is a compelling reason to keep it there. Control and freedom are powerful reasons to roll.

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Re: Rollover to Vanguard or Fidelity?

Post by retiredjg » Thu Aug 08, 2019 4:17 pm

triyoda wrote:
Wed Aug 07, 2019 7:13 pm
I use an asset allocation model (gone fishing portfolio), so I do not need anything exotic. However, I will divide my US stocks between a Total Market Index and Small cap index, I will divide my international stocks between emerging and developed markets and I also plan to put 5% in a REIT and 5% in a precious metals/gold fund/ETF. So not quite as simple as a 3 fund portfolio, but only slightly more complicated.
I think Fidelity has perfectly good index funds in all of these except precious metals/gold.

I would not buy Vanguard products anywhere but Vanguard.

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Re: Rollover to Vanguard or Fidelity?

Post by Hector » Thu Aug 08, 2019 4:20 pm

carmonkie wrote:
Thu Aug 08, 2019 2:56 pm
How is your Asset Allocation?

I would think, you can use this "old" 401(k) as your bond holder and buy all equities on your "new", taxable and Roth accounts and as time go by use this account to get your AA back on track.
@180K, they will not force you to close or rollover, You can keep it as long as you want and as long as the balance does not fall below 5K.

If your income is high enough that you can't contribute to a Roth, the Traditional IRA is factored in when you try to do a Backdoor Roth IRA conversion, the Pro-Rata rule kicks in to determine how much of the backdoor Rollover is gong to be taxed.

The pro-rata rule. The IRS requires rollovers from traditional IRAs to Roth IRAs to be done pro rata. Here’s how it works: When determining your tax bill on a conversion from a traditional IRA to a Roth IRA, the IRS is going to look at all of your traditional IRA accounts combined. If all of your traditional IRAs combined consist of, say, 70% pre-tax money and 30% after-tax money, that ratio determines what percentage of the money you convert to a Roth is going to be taxable. In this example, no matter how much money you convert or which IRA account you pull the money from, 70% of the amount you convert to the Roth will be taxable. You can’t choose to convert only after-tax money; the IRS won’t allow it. And a word about timing: the IRS applies the pro-rata rule to your total IRA balance at year-end, not at the time of conversion.

Without traditional IRAs, the pro-rata rule does not apply and you only pay taxed on the gains, if all money is kept in Money Market at the time of the rollover, the Rollover can be done almost tax-free and then put to work on your AA and grow tax free.
If I did not keep track of amount of pre-tax and post tax contribution, would my broker have this data?
What about deductible and non-deductible IRA? Would my broker have this data?
Can I rollover 401k to Roth IRA?

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Hector
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Re: Rollover to Vanguard or Fidelity?

Post by Hector » Thu Aug 08, 2019 4:21 pm

One more benefit of 401k is stable value fund.

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Re: Rollover to Vanguard or Fidelity?

Post by noraz123 » Thu Aug 08, 2019 4:25 pm

retiredjg wrote:
Thu Aug 08, 2019 4:17 pm

I think Fidelity has perfectly good index funds in all of these except precious metals/gold.

I would not buy Vanguard products anywhere but Vanguard.
+1 to what retiredjg said.

If you are going to rollover to IRA, I would roll it over to Fidelity. I think Fidelity has some great mutual funds on par with Vanguard, and I find both Fidelity's website and their customer service superior.

I wouldn't worry about access to a "backdoor Roth" if you already have a regular or rollover IRA. You're not losing anything.

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Re: Rollover to Vanguard or Fidelity?

Post by retiredjg » Thu Aug 08, 2019 4:51 pm

Hector wrote:
Thu Aug 08, 2019 4:20 pm
quote=carmonkie post_id=4686301 time=1565294217 user_id=136229]
If I did not keep track of amount of pre-tax and post tax contribution, would my broker have this data?
What account are you talking about?

What about deductible and non-deductible IRA? Would my broker have this data?
No. Your broker has no idea if you deducted a contribution to IRA or not. You have to keep up with this yourself. Have you made non-deductible contributions to IRA? If yes, have you documented that on your taxes using Form 8606?

Can I rollover 401k to Roth IRA?
Yes, you can but it is rarely a good idea. Why defer taxes just to turn around and pay them later, possibly at a higher tax rate?

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Hector
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Re: Rollover to Vanguard or Fidelity?

Post by Hector » Thu Aug 08, 2019 5:13 pm

retiredjg wrote:
Thu Aug 08, 2019 4:51 pm
Hector wrote:
Thu Aug 08, 2019 4:20 pm
quote=carmonkie post_id=4686301 time=1565294217 user_id=136229]
If I did not keep track of amount of pre-tax and post tax contribution, would my broker have this data?
What account are you talking about?
Traditional IRA.
retiredjg wrote:
Thu Aug 08, 2019 4:51 pm
What about deductible and non-deductible IRA? Would my broker have this data?
No. Your broker has no idea if you deducted a contribution to IRA or not. You have to keep up with this yourself. Have you made non-deductible contributions to IRA? If yes, have you documented that on your taxes using Form 8606?
No, I have not made non-deductible contribution to IRA.

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ruralavalon
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Re: Rollover to Vanguard or Fidelity?

Post by ruralavalon » Thu Aug 08, 2019 6:21 pm

Does your new employer offer a 401k or similar plan (403b, 457b, SIMPLE IRA, TSP)? Will the new employer's plan accept a rollover from your former employer's plan?

What funds are offered in the new employer's plan? Please give fund names, tickers and expense ratios.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Hector
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Re: Rollover to Vanguard or Fidelity?

Post by Hector » Thu Aug 08, 2019 6:48 pm

ruralavalon wrote:
Thu Aug 08, 2019 6:21 pm
Does your new employer offer a 401k or similar plan (403b, 457b, SIMPLE IRA, TSP)? Will the new employer's plan accept a rollover from your former employer's plan?

What funds are offered in the new employer's plan? Please give fund names, tickers and expense ratios.
One benefit of rollover to new employer's plan is ESRA protection, correct?

ClaycordJCA
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Re: Rollover to Vanguard or Fidelity?

Post by ClaycordJCA » Thu Aug 08, 2019 11:26 pm

I have made the somewhat reluctant decision to roll my 401k plan to either Fidelity or Schwab when I retire. My DW has no interest in investments and is disabled by chronic migraines. The migraines can temporarily impair her cognitive functioning. If something were to happen to me, she needs to have a local branch where she can meet with brokerage personnel, physically submit POAs or a Death Certificate, and have the branch personnel explain things to her if needed. So, Vanguard is not an option for us. We will be looking to pay the $75 fee and move everything in the 401k into a Life Strategy Fund (and maybe some Wellesley Income) with express instructions for DW to leave it alone except for taking 4% per year and when the time comes RMDs. I expect Fidelity/Schwab will waive the fee or we will be eligible for a transfer bonus that will cover the costs.

The point of the above is to recommend that you also consider whether having a local branch is desirable in your situation. It may not be. But you should include that in your evaluation.

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Re: Rollover to Vanguard or Fidelity?

Post by RetiredAL » Fri Aug 09, 2019 12:03 am

ClaycordJCA wrote:
Thu Aug 08, 2019 11:26 pm
I have made the somewhat reluctant decision to roll my 401k plan to either Fidelity or Schwab when I retire. My DW has no interest in investments and is disabled by chronic migraines. The migraines can temporarily impair her cognitive functioning. If something were to happen to me, she needs to have a local branch where she can meet with brokerage personnel, physically submit POAs or a Death Certificate, and have the branch personnel explain things to her if needed. So, Vanguard is not an option for us. We will be looking to pay the $75 fee and move everything in the 401k into a Life Strategy Fund (and maybe some Wellesley Income) with express instructions for DW to leave it alone except for taking 4% per year and when the time comes RMDs. I expect Fidelity/Schwab will waive the fee or we will be eligible for a transfer bonus that will cover the costs.

The point of the above is to recommend that you also consider whether having a local branch is desirable in your situation. It may not be. But you should include that in your evaluation.
ClaycordJ -- Do be aware the std POA form at Fidelity is 'durable', whereas the std form at Schwab is not. To get a 'durable POA' at Schwab, you have to submit your own POA documents along with a different Schwab form relating to an external POA document. I'm not sure how Schwab would ever know when incapacity has set in, which makes their std POA invalid, but that is what is stated in their std POA form. Not a show stopper, but an item to be aware of.

I have both Schwab and Fidelity accounts and have used the local offices at times. I rate their offices as comparable and their telephone support as good.

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Re: Rollover to Vanguard or Fidelity?

Post by usagi » Fri Aug 09, 2019 4:11 am

ClaycordJCA wrote:
Thu Aug 08, 2019 11:26 pm
I have made the somewhat reluctant decision to roll my 401k plan to either Fidelity or Schwab when I retire. My DW has no interest in investments and is disabled by chronic migraines. The migraines can temporarily impair her cognitive functioning. If something were to happen to me, she needs to have a local branch where she can meet with brokerage personnel, physically submit POAs or a Death Certificate, and have the branch personnel explain things to her if needed. So, Vanguard is not an option for us. We will be looking to pay the $75 fee and move everything in the 401k into a Life Strategy Fund (and maybe some Wellesley Income) with express instructions for DW to leave it alone except for taking 4% per year and when the time comes RMDs. I expect Fidelity/Schwab will waive the fee or we will be eligible for a transfer bonus that will cover the costs.

The point of the above is to recommend that you also consider whether having a local branch is desirable in your situation. It may not be. But you should include that in your evaluation.
I would take the time to develop an IPS that is very clear, create a cover page that denotes the number of pages and dates, have that notarized, then take it to Schwab/Fido and have them read it, and sign a notarized statement they reviewed it, have them scan the IPS and attach it to you internal file.

Cheers...

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ruralavalon
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Re: Rollover to Vanguard or Fidelity?

Post by ruralavalon » Fri Aug 09, 2019 9:49 am

Hector wrote:
Thu Aug 08, 2019 6:48 pm
ruralavalon wrote:
Thu Aug 08, 2019 6:21 pm
Does your new employer offer a 401k or similar plan (403b, 457b, SIMPLE IRA, TSP)? Will the new employer's plan accept a rollover from your former employer's plan?

What funds are offered in the new employer's plan? Please give fund names, tickers and expense ratios.
.
One benefit of rollover to new employer's plan is ESRA protection, correct?
Yes.

Additional considerations include:

1) the convenience of having one fewer account to keep track and manage, if you move the old 401k into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA for higher income individuals, and

4) a 401k allows distributions penalty free starting at age 55 if no longer employed, and has other provisions for withdrawals earlier than age 59.5.

Wiki article, 401k, "Move to new 401k". Wiki article, 401k, ”Rollover to IRA".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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