Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

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dbk
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Joined: Sat Aug 26, 2017 2:50 am

Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by dbk » Mon Sep 11, 2017 12:55 am

I have workplace 401k at Fidelity. So far all the amount contributed into is Pre-Tax. Now I am trying to build a Three-Fund portfolio by using Fidelity Brokeragelink. I have following questions in this regard.

1) When I transfer funds to Brokeragelink, are those funds still remain as Pre-Tax 401k amount?

2) I am done with 18k contribution to 401k this year. I am planning to convert all funds to ROTH early next year. Is it better to convert the funds to ROTH first and then exchange the funds with Brokeragelink or viceversa? or I can do anytime next year?

3) Is there any restriction on percentage of total funds that can be exchanged with Brokeragelink account?

4) In future, out of my paycheck's 401k amount, I am only planning to use 27% of it for the 401k's suggested funds and the rest I am planning to use funds in Brokeragelink. Is it doable? Any issues or restrictions here?

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oldcomputerguy
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Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by oldcomputerguy » Mon Sep 11, 2017 6:27 am

dbk wrote:
Mon Sep 11, 2017 12:55 am
I have workplace 401k at Fidelity. So far all the amount contributed into is Pre-Tax. Now I am trying to build a Three-Fund portfolio by using Fidelity Brokeragelink. I have following questions in this regard.

1) When I transfer funds to Brokeragelink, are those funds still remain as Pre-Tax 401k amount?

2) I am done with 18k contribution to 401k this year. I am planning to convert all funds to ROTH early next year. Is it better to convert the funds to ROTH first and then exchange the funds with Brokeragelink or viceversa? or I can do anytime next year?

3) Is there any restriction on percentage of total funds that can be exchanged with Brokeragelink account?

4) In future, out of my paycheck's 401k amount, I am only planning to use 27% of it for the 401k's suggested funds and the rest I am planning to use funds in Brokeragelink. Is it doable? Any issues or restrictions here?
Re (1): yes, it's still considered as part of your 401(k) plan, and is still tax-deferred.

Re (2): no idea, sorry.

Re (3): check your 401(k) plan documents. I had BrokerageLink in my Fidelity 401(k), and the plan limited the amount I could move to BrokerageLink to 90% of the total.

Re (4): seems doable to me. BrokerageLink should show up as an investment option in your 401(k) just like any of the other investment options, so you would set your plan contributions to contribute 73% to BrokerageLink, then on the BrokerageLink side you would set up automatic investments from the incoming cash into your desired investments.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

rigoodma
Posts: 41
Joined: Wed May 21, 2014 12:04 pm

Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by rigoodma » Mon Sep 11, 2017 6:43 am

You need to check with your company's 401k documentation. My company has Fidelity for 401k and all of this is explained in the documentation or there is a number to call.

retiredjg
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Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by retiredjg » Mon Sep 11, 2017 7:38 am

dbk wrote:1) When I transfer funds to Brokeragelink, are those funds still remain as Pre-Tax 401k amount?
Yes
2) I am done with 18k contribution to 401k this year. I am planning to convert all funds to ROTH early next year. Is it better to convert the funds to ROTH first and then exchange the funds with Brokeragelink or viceversa? or I can do anytime next year?
Do you mean change all the money already in there to Roth or just change your contributions to Roth? Converting all the money in the plan to Roth is usually not a good idea. Do you think your situation is an exception?
3) Is there any restriction on percentage of total funds that can be exchanged with Brokeragelink account?

4) In future, out of my paycheck's 401k amount, I am only planning to use 27% of it for the 401k's suggested funds and the rest I am planning to use funds in Brokeragelink. Is it doable? Any issues or restrictions here?
You have to see what your plan requires/allows.

Gadget
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Joined: Fri Mar 17, 2017 1:38 pm

Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by Gadget » Mon Sep 11, 2017 7:02 pm

retiredjg wrote:
Mon Sep 11, 2017 7:38 am
dbk wrote:1) When I transfer funds to Brokeragelink, are those funds still remain as Pre-Tax 401k amount?
Yes
2) I am done with 18k contribution to 401k this year. I am planning to convert all funds to ROTH early next year. Is it better to convert the funds to ROTH first and then exchange the funds with Brokeragelink or viceversa? or I can do anytime next year?
Do you mean change all the money already in there to Roth or just change your contributions to Roth? Converting all the money in the plan to Roth is usually not a good idea. Do you think your situation is an exception?
3) Is there any restriction on percentage of total funds that can be exchanged with Brokeragelink account?

4) In future, out of my paycheck's 401k amount, I am only planning to use 27% of it for the 401k's suggested funds and the rest I am planning to use funds in Brokeragelink. Is it doable? Any issues or restrictions here?
You have to see what your plan requires/allows.
Agreed. And for what it's worth, my brokeragelink plan has no restriction on percentage of total funds that can be exchanged. It also allows you to do #4 if you want, although I don't know why you would. The Fidelity no transaction fee funds were much better than what was offered in my plan regularly. But like the above poster said, you have to check your specific plan. I had to call Fidelity and verify everything, and ensure that there were no extra brokeragelink fees with my plan. They said each plan is different and has different details depending on what the company setup.

dbk
Posts: 16
Joined: Sat Aug 26, 2017 2:50 am

Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by dbk » Tue Sep 12, 2017 10:34 pm

Thanks everyone. Your inputs made me research and educate myself more before calling Fidelity.

Here are the answers I received from Fidelity.

For 1), Yes. they still remain as Pre-Tax. Further, when you put in Roth money in future, Fidelity is able to clearly distinguish between them. They even showed me a place in netbenefits wherein we can see amount of pre-tax etc. in summary section. Further, they said they are able to even distinguish between Pre-tax vs ROTH in brokeragelink as well.

For 3), It depends on plan. In my plan, I can exchange 95% of existing amount in 401k account with 401k linked brokeragelink account. So, "that" 5% always remain in 401k account :!: . If you have same question, please contact your Fidelity contact directly. Hope information gives you some hint.

For 4). In my plan, it's doable and I can allocate 100% of future investments in to brokeragelink account.

dbk
Posts: 16
Joined: Sat Aug 26, 2017 2:50 am

Re: Fidelity 401k - Brokeragelink - Pre-Tax/ROTH

Post by dbk » Wed Sep 13, 2017 1:26 pm

dbk wrote:
Tue Sep 12, 2017 10:34 pm
For 4). In my plan, it's doable and I can allocate 100% of future investments in to brokeragelink account.
Correction on the above. My plan allows 95% (NOT 100%) of future investments in to brokeragelink account.

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