Record keeping fees fidelity 401k vs. brokerage link

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am
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Record keeping fees fidelity 401k vs. brokerage link

Post by am » Sat Jan 21, 2017 11:21 am

My plan charges .08% for record keeping fees for 401k at fidelity. I did not see this fee for the one fund in my brokerage link account. By using brokerage link, can you avoid the record keeping fees?

tenkuky
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by tenkuky » Sat Jan 21, 2017 2:38 pm

Yes, but...
1. The funds available to you in BrokerageLink are likely a different class compared to the Institutional ones in 401K with slightly higher ER even for same fund.
2. Some funds available in 401K may not be available in BL, some providers offer various family funds.
3. Is the fee being charged large enough to warrant the hassle of transferring over and chance of delays and time out of market?
Look at what you have and decide.
I did both (partial rollover to BL and left some in existing employer account).

radiowave
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by radiowave » Sat Jan 21, 2017 4:03 pm

Check if you also have a 403(b) option and if that is/not covered by the record keeping fees. Actually I have good institutional index funds in my 403b like VG total bond with no record keeping fees. You may also have inservice withdrawal allowable in your plan and could move your funds after a certain age even if still working.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

Topic Author
am
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by am » Sat Jan 21, 2017 4:19 pm

I paid 75 dollars total record keeping fees on total fidelity bond inst. and total int index vanguard with expenses of .03 and .12 in 401k. I can transfer to fidelity total bond and fidelity total intern. index with expenses of .05 and .11 in brokerage link without fees as far as I can tell. Upsetting that Fidelity representative didn't tell me about these fees when I switched to the 401k funds out of brokerage link last month. Is this a no brainer to go back to all brokerage link 3 funder?

radiowave
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by radiowave » Sat Jan 21, 2017 4:37 pm

am wrote:I paid 75 dollars total record keeping fees on total fidelity bond inst. and total int index vanguard with expenses of .03 and .12 in 401k. I can transfer to fidelity total bond and fidelity total intern. index with expenses of .05 and .11 in brokerage link without fees as far as I can tell. Upsetting that Fidelity representative didn't tell me about these fees when I switched to the 401k funds out of brokerage link last month. Is this a no brainer to go back to all brokerage link 3 funder?
One potential gotcha is trading fees in the brokerage window. Do you know what they will charge if you move funds around, e.g. exchange total international for total bond?
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

ofckrupke
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by ofckrupke » Sat Jan 21, 2017 4:37 pm

am wrote:My plan charges .08% for record keeping fees for 401k at fidelity. I did not see this fee for the one fund in my brokerage link account. By using brokerage link, can you avoid the record keeping fees?
Details like this are specific to the terms your sponsor has negotiated with the recordkeeper, asset provider, custodian, and should be spelled out in your plan's SPD and the full-length plan document they hide in the HR office.
But it sounds like, although utility may be limited to your plan's participants, you are onto something.

Little quirks like this abound in the plan world: in spouse's employer plan, the first dollar custodied at Fidelity (Vanguard Institutional class funds including Target Retirements, etc, and BrokerageLink) draws a $50+ annual flat fee - even if it all gets routed to BL. But participant assets can alternatively be custodied at TIAA, and there the flat rate is zero; and in TIAA custody, the same Vanguard Target Retirement institutional funds are available at the same 0.10% ERs...go figure. In-service asset transfer between providers allowed anytime without cost. Eventually we'll want something missing from this plan's TIAA menu badly enough to start paying the annual Fido fee...but not yet.

Topic Author
am
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by am » Sun Jan 22, 2017 11:47 am

Reading on the internet, looks like the 75 dollar fee may be quarterly. And what's worse, if I pull the funds out of 401k and transfer to brokerage link, I may be charged a years worth of record keeping fees. Ridiculous. Going to call Fidelity tomorrow and hope for the best. Anyone have any experience with similar circumstances?

alwyn
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by alwyn » Tue Oct 02, 2018 4:23 pm

Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(

Can you share Fidelity's response?

In an old employer's 401k I have never seen recordkeeping fee's until I opened a brokeragelink account and transfered
from one index fund to brokeragelink.

Now suddenly I'm charged recordkeeping fees on every fund I have.

ryman554
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by ryman554 » Wed Oct 03, 2018 9:23 am

alwyn wrote:
Tue Oct 02, 2018 4:23 pm
Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(

Can you share Fidelity's response?

In an old employer's 401k I have never seen recordkeeping fee's until I opened a brokeragelink account and transfered
from one index fund to brokeragelink.

Now suddenly I'm charged recordkeeping fees on every fund I have.
Don't thank fidelity, thank your employer. Do you have an employer match? Subtract $67 from it and call it a day. You still come out ahead in terms of free money. Note, I have a $25 quarterly fee that I have managed to avoid paying every quarter by being in brokerageLink. Go figure. Once this year, they got wise and started transferring $25 out of my BL, but they didn't maage to take it from the retail side. If I cared enough, I could probably save it from whenever the next $25 fee is due....

Notice that if you have all your stuff in the BL side, you aren't paying any AUM-like fees to the recordholder that are likely bundled into the ER of the retail funds. So you get a 401(k) quite literally for "free". Paying $100 for the privilege of having a 401(k) doesn't sound too awful to me.

mervinj7
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by mervinj7 » Wed Oct 03, 2018 10:36 am

alwyn wrote:
Tue Oct 02, 2018 4:23 pm
Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(
It is up to the employer whether or not they want pass along the recordkeeping fee or not. For example, my wife's MegaUni's 403b has no recordkeeping fees while my MegaCorp's 401k charges $16/quarter. Both are managed by Fidelity and both have access to BrokerageLink. When considering the value/expenses of the 401k, I subtract the recording keeping fee from the 401k match. For example, if you made $100k/year in salary and your company had a 4% match, you can consider your true match to be $4000-$16*4=$3936.

The biggest benefit of having Fidelity's brokeragelink is that you have access to all of Fidelity's ultra low ER mutual funds. That means you can buy the institutional premium shares of Total US (FSKAX), Total International (FTIHX), and Total Bond (FXNAX) with ERs of 0.015%, 0.06%, and 0.025% respectively. Anybody here would love to have those index funds as options in their 401k.

SpideyIndexer
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by SpideyIndexer » Wed Oct 03, 2018 11:04 am

mervinj7 wrote:
Wed Oct 03, 2018 10:36 am
alwyn wrote:
Tue Oct 02, 2018 4:23 pm
Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(
It is up to the employer whether or not they want pass along the recordkeeping fee or not. For example, my wife's MegaUni's 403b has no recordkeeping fees while my MegaCorp's 401k charges $16/quarter. Both are managed by Fidelity and both have access to BrokerageLink. When considering the value/expenses of the 401k, I subtract the recording keeping fee from the 401k match. For example, if you made $100k/year in salary and your company had a 4% match, you can consider your true match to be $4000-$16*4=$3936.

The biggest benefit of having Fidelity's brokeragelink is that you have access to all of Fidelity's ultra low ER mutual funds. That means you can buy the institutional premium shares of Total US (FSKAX), Total International (FTIHX), and Total Bond (FXNAX) with ERs of 0.015%, 0.06%, and 0.025% respectively. Anybody here would love to have those index funds as options in their 401k.
Is this always true or sponsor-dependent?

tenkuky
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by tenkuky » Wed Oct 03, 2018 6:11 pm

SpideyIndexer wrote:
Wed Oct 03, 2018 11:04 am
mervinj7 wrote:
Wed Oct 03, 2018 10:36 am
alwyn wrote:
Tue Oct 02, 2018 4:23 pm
Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(
It is up to the employer whether or not they want pass along the recordkeeping fee or not. For example, my wife's MegaUni's 403b has no recordkeeping fees while my MegaCorp's 401k charges $16/quarter. Both are managed by Fidelity and both have access to BrokerageLink. When considering the value/expenses of the 401k, I subtract the recording keeping fee from the 401k match. For example, if you made $100k/year in salary and your company had a 4% match, you can consider your true match to be $4000-$16*4=$3936.

The biggest benefit of having Fidelity's brokeragelink is that you have access to all of Fidelity's ultra low ER mutual funds. That means you can buy the institutional premium shares of Total US (FSKAX), Total International (FTIHX), and Total Bond (FXNAX) with ERs of 0.015%, 0.06%, and 0.025% respectively. Anybody here would love to have those index funds as options in their 401k.
Is this always true or sponsor-dependent?
Plan dependent. I know for a fact that my BrokerageLink does not have those institutional premium options. I have the regular premium options of the same funds.

mervinj7
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by mervinj7 » Wed Oct 03, 2018 10:40 pm

tenkuky wrote:
Wed Oct 03, 2018 6:11 pm

Plan dependent. I know for a fact that my BrokerageLink does not have those institutional premium options. I have the regular premium options of the same funds.
What are the ticker symbols and the ER of the premium share class index funds you have access to? They should be the same ER.

ryman554
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by ryman554 » Thu Oct 04, 2018 8:27 am

tenkuky wrote:
Wed Oct 03, 2018 6:11 pm
SpideyIndexer wrote:
Wed Oct 03, 2018 11:04 am
mervinj7 wrote:
Wed Oct 03, 2018 10:36 am
alwyn wrote:
Tue Oct 02, 2018 4:23 pm
Nevermind. I see my plan suddenly has a $67 a year recordkeeping fee. For me that's an additional 0.08% expense, thanks Fidelity :(
It is up to the employer whether or not they want pass along the recordkeeping fee or not. For example, my wife's MegaUni's 403b has no recordkeeping fees while my MegaCorp's 401k charges $16/quarter. Both are managed by Fidelity and both have access to BrokerageLink. When considering the value/expenses of the 401k, I subtract the recording keeping fee from the 401k match. For example, if you made $100k/year in salary and your company had a 4% match, you can consider your true match to be $4000-$16*4=$3936.

The biggest benefit of having Fidelity's brokeragelink is that you have access to all of Fidelity's ultra low ER mutual funds. That means you can buy the institutional premium shares of Total US (FSKAX), Total International (FTIHX), and Total Bond (FXNAX) with ERs of 0.015%, 0.06%, and 0.025% respectively. Anybody here would love to have those index funds as options in their 401k.
Is this always true or sponsor-dependent?
Plan dependent. I know for a fact that my BrokerageLink does not have those institutional premium options. I have the regular premium options of the same funds.
It's likely that you do. However, it's also likely that you don't have the minimum $100M+ to invest in it.... Granted, I never tried myself.

mervinj7
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by mervinj7 » Thu Oct 04, 2018 10:01 am

ryman554 wrote:
Thu Oct 04, 2018 8:27 am
It's likely that you do. However, it's also likely that you don't have the minimum $100M+ to invest in it.... Granted, I never tried myself.
All of those Fidelity funds have $0 minimums, not $100M. :)

tenkuky
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by tenkuky » Thu Oct 04, 2018 10:57 am

I have FSTVX, FTIPX and FSITX for tot stk, intl and bond.
I checked and they are all the same ERs as the ones you have.
Weird.

mervinj7
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by mervinj7 » Thu Oct 04, 2018 1:49 pm

tenkuky wrote:
Thu Oct 04, 2018 10:57 am
I have FSTVX, FTIPX and FSITX for tot stk, intl and bond.
I checked and they are all the same ERs as the ones you have.
Weird.
Fidelity removed the minimums on all of their index funds. Moreover, in November, all the various share classes will be merged to the Institutional Premium share class. That means, you have access to ER levels that in the past would only be available to folks with $100M+ investments. BrokerageLink is a very powerful opportunity for those who don't have great index fund options in their 401k.

https://www.fidelity.com/bin-public/060 ... esting.pdf
SpideyIndexer wrote:
Wed Oct 03, 2018 11:04 am
Is this always true or sponsor-dependent?


I only have a sample size of 2 Fidelity accounts to check. If you have BrokerageLink, please check which Three-Fund type index funds are available to you and report back here along with the ERs.

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Mursili
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by Mursili » Thu Oct 04, 2018 4:13 pm

My employer's plan throws a small wrinkle into the mix. We do not pay record-keeping fees from BrokerageLink, but cannot move all funds into Brokerage Link either. In addition no more than 95% of new contributions can go into BrokerageLink. That way they ensure that will always be funds outside of BrokerageLink to pay the fees.

I have not really tried to push this to see if there were any ways around it. It just seemed to make sense and I have dropped worrying about it. I use the stable value fund in the 401(k) as part of my 3ish-fund portfolio.
When it comes to havoc, no one wreaks like me! - Dr. Heinz Doofenshmirtz

alwyn
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by alwyn » Fri Oct 05, 2018 11:26 am

I have BrokerageLink in this specific 401k.

My current employer does not and has some gaping holes in their options.

Any advice on how to tactfully get a corporation to add BrokerageLink? This is a large privately held company.

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Mursili
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Re: Record keeping fees fidelity 401k vs. brokerage link

Post by Mursili » Fri Oct 05, 2018 8:56 pm

I imagine that your employer has some team/committee that decides on what is offered by the 401(k). I have no idea how hard it would be to communicate with them and tell them what you think. I would not hesitate sending a message to (for example) benefits@megacorp.com if I thought the 401(k) needed a change. I would try to follow it up with a phone call.
When it comes to havoc, no one wreaks like me! - Dr. Heinz Doofenshmirtz

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