Is there a reason I can't do a single-transaction rebalance in my IRAs?

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Oreamnos
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Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by Oreamnos » Tue Jan 16, 2018 4:54 pm

Was attempting to do a little bit of rebalancing earlier today. For my megacorp Fidelity 401k and non-qualified accounts, the Fidelity NetBenefits site lets me specify a rebalancing target allocation among my investments, and complete that via a "single" transaction (actually requires a few separate sells and buys, but it looks like one shot for me).

But for the Fidelity rollover IRA and Roth IRA accounts that were created as a result of doing in-service rollovers of after-tax 401k contributions and matching earnings, no such rebalancing capability exists. I have to enter several separate trades. Why is that? It looks like my Vanguard traditional and Roth IRAs operate the same way.

It seems like the rebalance capability provided for NetBenefits accounts should be available for IRA accounts. What am I missing?

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Meg77
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by Meg77 » Tue Jan 16, 2018 5:03 pm

You aren't missing anything. I have had the option in one of my 401k accounts to do one click rebalancing as well, but I have never seen that in any direct brokerage account (Vanguard, Fidelity, Scottrade, etc.). The weird thing isn't that you are unable to do this on most platforms; the 401k plans which allow it are the anomaly.

401k plans have all sorts of unique features, which you and/or your company generally pay a premium for either through fund expense ratios or the 401k administration fees. This is one such feature.
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dbr
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by dbr » Wed Jan 17, 2018 9:53 am

I don't know why it is but it is true but many/most/all 401k plans seem to allow a one shot redistribution of the assets over funds at any time. At least mine does.

livesoft
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by livesoft » Wed Jan 17, 2018 10:08 am

Neither I nor my spouse ever had a 401k that did this. We would never want to use such a feature either.

However, 401k plans usually have no initial minimums for each fund, but other accounts do. Also other accounts could have other kinds of investments than mutual funds. I imagine a one step rebalance would have more gotchas to code for in such accounts than in a 401k.
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Oreamnos
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by Oreamnos » Thu Jan 18, 2018 1:26 pm

livesoft wrote:
Wed Jan 17, 2018 10:08 am
We would never want to use such a feature either.
Why is that? It's super quick and easy, with no adverse consequences (as far as I know, which is why I ask).

livesoft
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by livesoft » Thu Jan 18, 2018 1:41 pm

I have a taxable account and I do not want it to have the same asset allocation as my other accounts. I do not want multi-transaction things happening because I don't want to pay taxes that are trivially avoided. I make adjustments in my tax-advantaged accounts based on the entire portfolio asset allocation which does include the taxable account.
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pkcrafter
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by pkcrafter » Thu Jan 18, 2018 7:08 pm

Oreamnos, your rebalancing sounds complicated. What is your AA, how many funds total, how often are you rebalancing?


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Oreamnos
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by Oreamnos » Thu Jan 18, 2018 7:59 pm

pkcrafter wrote:
Thu Jan 18, 2018 7:08 pm
Oreamnos, your rebalancing sounds complicated. What is your AA, how many funds total, how often are you rebalancing?

Not complicated at all; just your basic 3 fund kinda thing. Doing separate transactions for the rebalance isn't hard, it just requires doing a touch of easy math. But the way it's implemented for the 401k is mega-easy; just tell it what percentage you want for each fund, and it automagically sells the right amount of the high stuff to buy the low stuff to get to the target allocation. No math required.

My question was really about whether there's some conceptual difference between 401ks and IRAs that causes me to have that capability in a Fidelity 401k, but not a Fidelity IRA.

bada bing
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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by bada bing » Thu Jan 18, 2018 8:38 pm

401k's typically have a pretty limited menu of investment options. Common in mega-corp
plans are for the options to be proprietary investment trusts that aren't available to trade outside the plan.
They are often in house products of the custodian. Swapping funds between the limited options
is easy and fast.

IRAs at a brokerage custodian have a big assortment of mutual funds, individual stocks, etfs, etc. The
task for a brokerage to accomplish a rebalance in that universe is an order of magnitude larger task. It
also typically takes more than one trading day to accomplish because it can involve moving funds between
mutual fund families..

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Re: Is there a reason I can't do a single-transaction rebalance in my IRAs?

Post by pkcrafter » Thu Jan 18, 2018 8:57 pm

Oreamnos wrote:
Thu Jan 18, 2018 7:59 pm
pkcrafter wrote:
Thu Jan 18, 2018 7:08 pm
Oreamnos, your rebalancing sounds complicated. What is your AA, how many funds total, how often are you rebalancing?

Not complicated at all; just your basic 3 fund kinda thing. Doing separate transactions for the rebalance isn't hard, it just requires doing a touch of easy math. But the way it's implemented for the 401k is mega-easy; just tell it what percentage you want for each fund, and it automagically sells the right amount of the high stuff to buy the low stuff to get to the target allocation. No math required.

My question was really about whether there's some conceptual difference between 401ks and IRAs that causes me to have that capability in a Fidelity 401k, but not a Fidelity IRA.
:thumbsup

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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