Need Help on Moving Funds from Fidelity PAS Account

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
lynnec32
Posts: 5
Joined: Tue Jul 27, 2021 7:56 pm

Need Help on Moving Funds from Fidelity PAS Account

Post by lynnec32 »

Ugh, I just wrote this long post with all the details, and then went to preview it, and it asked me to log in again, and I lost the whole thing. :oops:

So, this will be a lot shorter - lucky for you!

My husband and I have an investment account and an inherited IRA with Fidelity's wealth advisor services (used to be PAS). I used to work for Fidelity, so I was able to get the service for free. Now we pay a service fee of .973 and 1.087% for the IRA and investment account respectively - about $1100 a quarter. That buys us tax harvesting and a once a year portfolio review - which we haven't had in over a year.

I searched the forum for information on how to transfer these accounts to a non-managed account, and I found some old (2015, 17, etc. - before the recent tax changes) information. Up until recently, I thought that I would have to liquidate them (and pay CG) and re-invest, but I believe I will be able to transfer in-kind for most of them. The IRA has a lot of Strategic Advisory funds, which I have read are not eligible for in-kind transfer.

I have not been able to find any information about this kind of transaction on the Fidelity web site. Do I just call and tell the phone rep that I want to do an in-kind transfer? I already have a non-managed investment account to transfer to, and I also have a Roth IRA, but I'm thinking that it will have to be a traditional IRA to maintain the inherited status, but they could open one for us.

Any tax implication of which I should be aware? We "redeemed" $20k of the investment account in January 2021, and right now we have a realized gain of almost $5k.

Thank you for any advice you can give.
CharlesDickens
Posts: 55
Joined: Fri Jan 08, 2021 5:44 pm

Re: Need Help on Moving Funds from Fidelity PAS Account

Post by CharlesDickens »

I have no answers but am responding to keep this thread active, as I am in a similar situation. I have a tax-managed SMA (separately managed account) for tax loss harvesting. The fee is kind of high, but even net of fees it has usually beaten the S&P 500, so it is not a terrible account. Still, as time goes by, and based on my reading, the TLH opportunities continue to diminish, and the fund manager's options become more limited due to the built-in unrealized gains. In addition, I have more tax loss carry forwards than I expect to be able to use for a number of years, so the usefulness of the account for me has declined. I spoke with my Fidelity rep about this. Options are to sell it ( and realize CGs), transition it to another SMA with a different strategy (beat the S&P, but this account has still higher fees), or just hold the underlying stocks without the management and without the fees. Transitioning to the different SMA would trigger CGs but they might be spread out somewhat because I had the impression that they may keep some of the existing stocks. Keeping the stocks but shedding the management would not trigger the CGs. I don't know whether Fidelity would continue to provide the 1099s but my guess is that they would. Of course, Fidelity is pressing me to transition to the higher fee SMA. I have not made a decision yet, and am not in a hurry because the tax-managed SMA returns still are pretty good even net of fees.

I am pretty sure that eventually I will just keep the stocks and shed the management because I don't want to trigger the CGs. Unfortunately, that leads to a bit of a mess, having me hold 150 or so stocks directly, with a 100+ page 1099, but so be it. I also would lose the quarter percent increase in the cash back on my Fidelity credit card, but my new Alliant credit union card now is better at 2.5%, so no real loss there. I do feel a little bad for the Fidelity rep, because he has been very attentive to me, calling me 2x per year to discuss my portfolio and market trends (compare with Vanguard, which has not called me in 10 years despite having a much bigger account at VG than at Fido), which is another reason why I am not in a hurry to shed the management. Good luck.
User avatar
retired@50
Posts: 12821
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Need Help on Moving Funds from Fidelity PAS Account

Post by retired@50 »

I don't think there is a worry about paying capital gains taxes or any such tax implications inside an Inherited IRA.

If I understand correctly, the only taxes are ordinary income taxes on amounts withdrawn, in the year of the withdrawal. Similar to a regular IRA.

If I'm correct, then you could sell whatever "special" investment you're currently holding and buy a low-expense Fidelity index fund that suits you.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
lynnec32
Posts: 5
Joined: Tue Jul 27, 2021 7:56 pm

Re: Need Help on Moving Funds from Fidelity PAS Account

Post by lynnec32 »

CharlesDickens wrote: Wed Jul 28, 2021 8:54 am I have no answers but am responding to keep this thread active, as I am in a similar situation. ..... Options are to sell it ( and realize CGs), transition it to another SMA with a different strategy (beat the S&P, but this account has still higher fees), or just hold the underlying stocks without the management and without the fees. ...
There's one other option - adding more $ under management. The rep had mentioned this to me - if I transitioned my 401k money (I never transferred it to an IRA, so it's still in it's original Fidelity 401k) to a managed IRA, the total amount under management goes up significantly, bringing down their fee to as low as .20% (if you have 2m or more in Fidelity Wealth Services managed assets). I actually have liked managing my 401k, and I've beat the managed account performance (according to them because I have "dividend heavy" funds in my 401k), so that wasn't something that I wanted to consider. Plus - even with the lowest % (for which I probably wouldn't be eligible), I would have paid more in fees - I definitely do not think that it's worth it.

I'm going to call Fidelity today when I have a chance - busy day at work. Also, have to be able to get my husband on the line even though I have authority, I don't think it includes this.
User avatar
goingup
Posts: 4910
Joined: Tue Jan 26, 2010 12:02 pm

Re: Need Help on Moving Funds from Fidelity PAS Account

Post by goingup »

Not a Fidelity customer but I think you should be able to move all of your funds to a self-managed account. This you should be able to do without selling funds. If you have Strategic Advisory funds in an IRA that aren't eligible to transfer, you can sell them within the IRA without tax consequences.

It might be easier to go to a Fidelity office and make these changes in person. That is one advantage Fidelity has over Vanguard--local offices. :beer
Topic Author
lynnec32
Posts: 5
Joined: Tue Jul 27, 2021 7:56 pm

Re: Need Help on Moving Funds from Fidelity PAS Account

Post by lynnec32 »

Hi, just to close this out, we called Fidelity on Monday, 8/2 around 5 PM, and we told the rep that we wanted to move our money "in-kind." I already had a brokerage account, but I didn't have an IRA-BDA account, so I opened it while we were on the phone and the rep was doing other stuff. (note - if you have a BDA IRA, make sure you have the information about the deceased in order to open your account).

The money showed up in the account on Thursday, 8/5, which is what the Rep said. I've been since buying/moving money into ETFs and Index funds. First the IRA because since so much was in the Strategic funds, I was not able to move that in-kind, it had to be sold.

I'm a happy customer now - we plan to use that $4k that I was paying in fees on a nice vacation somewhere.

Thanks for your help.
Post Reply