T-bill maturity at Fidelity - what happens by default?

[JimmyD]

I'm interested in buying 3-month T-bills at Fidelity, however, before I pull the trigger, I'm wondering if anyone can confirm what happens upon maturity?

Will the T-bills be liquidated and the money be deposited into my core money market fund? Will it be auto-rolled into new T-bills? What if I don't want it auto-rolled?

I'm at the purchase confirmation screen and have done some searching, but I can't seem to find a clear answer on what happens when it matures.

Thank you for your help.

[MrJedi]

There is a checkbox before you submit the order if you want to autoroll or not. If not, then the funds will end up in your core/settlement at maturity.

[mrb09]

Here's a nice overview by finance buff

When they mature, if you don't auto roll, the bond value gets deposited in your core account.

If you do auto roll, you'll see an order for a new auction shortly before the old one matures. You'll also get an email notification. You can cancel at that time if you want, it is the same as if you set up the order itself and decided to cancel before the auction. If you don't cancel, it will auto-buy the new bills, and it will deposit the difference between the old bond mature price and the new discounted bond price in your core account.

[JimmyD]

There is a checkbox before you submit the order if you want to autoroll or not. If not, then the funds will end up in your core/settlement at maturity.

Thank you very much. Just purchased one and I did not have an option to auto-roll for some reason, but I didn't want to do that anyway.

[LK2012]

If you are buying a New Issue you have the option to auto-roll. If you are buying on the secondary market, perhaps you do not.

[JimmyD]

If you are buying a New Issue you have the option to auto-roll. If you are buying on the secondary market, perhaps you do not.

Ah, gotya. Thank you.

[Leif]

I have a related question.

I have a 3 mo. T-Bill on auto-roll at Fidelity. As I understand it, as of the maturity of the old T-bill a new 3 mo. T-Bill will be purchased. But if I want to pull out $10,000 and reinvest the rest, how does that work? I cancel the auto-roll order and put in a new order less the $10,000, right? But will the new order be accepted since I don't yet have the cash in my account? Is a one week delay required to accomplish this?

[Kevin M]

I have a related question.

I have a 3 mo. T-Bill on auto-roll at Fidelity. As I understand it, as of the maturity of the old T-bill a new 3 mo. T-Bill will be purchased. But if I want to pull out $10,000 and reinvest the rest, how does that work? I cancel the auto-roll order and put in a new order less the $10,000, right? But will the new order be accepted since I don't yet have the cash in my account? Is a one week delay required to accomplish this?

To cancel auto roll, you can either call, or wait until you see the order a couple of days before the auction then cancel it.

You should be able to place a new order without the cash in your money market funds, but it might depend on the size of your account. At Vanguard I was able to buy Treasuries with no cash in the settlement fund in a large account but not in a small account.

[rbd789]

At Fidelity, if you are not auto rolling, the funds from the maturing bill are available first thing in the morning. I believe you have a short window where you can get the new buy in before the auction cutoff time. I have not done this yet, it's just an observation.

My understanding based on reading and not personal experience is that at Vanguard, the matured funds don't appear until the following morning, so this might not be possible, there.

[w5000]

I have a 3 mo. T-Bill on auto-roll at Fidelity. As I understand it, as of the maturity of the old T-bill a new 3 mo. T-Bill will be purchased. But if I want to pull out $10,000 and reinvest the rest, how does that work? I cancel the auto-roll order and put in a new order less the $10,000, right? But will the new order be accepted since I don't yet have the cash in my account? Is a one week delay required to accomplish this?

My experience is that Fidelity won't let you place an order for an auction, even if you have another T-Bill maturing on the same date as the new T-Bill. In order to get around this, I added margin to my account (which also has other mutual funds / ETFs), and that enables me to place an order for the auction. I can confirm that I wasn't charged any margin interest since the cash for the maturing T-Bill was available in my account before the settlement of the new T-Bill.

[Leif]

I have a 3 mo. T-Bill on auto-roll at Fidelity. As I understand it, as of the maturity of the old T-bill a new 3 mo. T-Bill will be purchased. But if I want to pull out $10,000 and reinvest the rest, how does that work? I cancel the auto-roll order and put in a new order less the $10,000, right? But will the new order be accepted since I don't yet have the cash in my account? Is a one week delay required to accomplish this?

My experience is that Fidelity won't let you place an order for an auction, even if you have another T-Bill maturing on the same date as the new T-Bill. In order to get around this, I added margin to my account (which also has other mutual funds / ETFs), and that enables me to place an order for the auction. I can confirm that I wasn't charged any margin interest since the cash for the maturing T-Bill was available in my account before the settlement of the new T-Bill.

I hadn't considered that. But I've never had margin so it seems to me like using a hammer to kill a fly. Kevin's post above sound like he thinks it can be done. I'll give it a try without margin. If that does not work I will try calling the fixed income group. Sometimes they can do things not available to website users. If that doesn't work then waiting a week is not the end of the world. I just wanted to avoid have the maturity date slip a week since this is being used for my quarterly estimate taxes in an ongoing basis. I guess the other option is to set up multiple smaller T-Bills. Just more work on data entry in my spreadsheet. Agh.

[RyeBourbon]

I have a 3 mo. T-Bill on auto-roll at Fidelity. As I understand it, as of the maturity of the old T-bill a new 3 mo. T-Bill will be purchased. But if I want to pull out $10,000 and reinvest the rest, how does that work? I cancel the auto-roll order and put in a new order less the $10,000, right? But will the new order be accepted since I don't yet have the cash in my account? Is a one week delay required to accomplish this?

My experience is that Fidelity won't let you place an order for an auction, even if you have another T-Bill maturing on the same date as the new T-Bill. In order to get around this, I added margin to my account (which also has other mutual funds / ETFs), and that enables me to place an order for the auction. I can confirm that I wasn't charged any margin interest since the cash for the maturing T-Bill was available in my account before the settlement of the new T-Bill.

This is my experience as well. Having margin allows you to place those orders and as long as the funds are available for settlement, there is no interest charge.

[gpburdell]

To cancel auto roll, you can either call, or wait until you see the order a couple of days before the auction then cancel it.

You should be able to place a new order without the cash in your money market funds, but it might depend on the size of your account. At Vanguard I was able to buy Treasuries with no cash in the settlement fund in a large account but not in a small account.

I believe you can also cancel auto roll by cancelling the related Fidelity alert, but that would cancel auto roll for all t-bills. I've never tried that myself but I've read it on Fidelity somewhere.

[w5000]

I hadn't considered that. But I've never had margin so it seems to me like using a hammer to kill a fly. Kevin's post above sound like he thinks it can be done. I'll give it a try without margin. If that does not work I will try calling the fixed income group. Sometimes they can do things not available to website users. If that doesn't work then waiting a week is not the end of the world. I just wanted to avoid have the maturity date slip a week since this is being used for my quarterly estimate taxes in an ongoing basis. I guess the other option is to set up multiple smaller T-Bills. Just more work on data entry in my spreadsheet. Agh.

The first time I tried to do this (place an order for an auction for a new T-Bill that settled on the maturity date of the old T-Bill, without margin or enough settled funds for the order), it didn't work and I called. The representative was able to place the order for me. I was initially charged a ~$20 commission, presumably for placing an order by phone. I was just going to let it slide as the cost of learning a lesson, but within a few days it was reversed, so I didn't pay a commission in the end.

True, having margin on my account is overkill just to place orders in this situation, but I'd rather do that than call Fidelity. It's easy to add margin and doesn't cost anything, though I suppose I have to be a little careful now not to place orders for more than my settled funds when I buy other stuff since I don't really want to use margin. I also learned that Fidelity will only let you have margin on one account (if you have multiple taxable brokerage accounts).

[Leif]

^

Thanks for sharing your experience. I agree, margin sounds like the easiest way to accomplish this.