Can I use Fidelity's BrokerageLink to avoid 401k fees?

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car733
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Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by car733 » Tue Jul 10, 2018 3:19 pm

Hi,

My company uses Fidelity for 401k services. I am 100% invested on VANG INST TR 2050.
I was checking my transaction history and I noticed I have administrative fees and record keeping fees. They are not high, they are something like 40-50usd per quarter.

Since my company allows using BrokerageLink, I was wondering if I can use BrokerageLink to setup something similar to VANG INST TR 2050 using fidelity mfs and avoid those fees.

Would I also be charged administrative fees and record keeping fees if I use BrokerageLink?

Thanks!

Dottie57
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by Dottie57 » Tue Jul 10, 2018 3:33 pm

car733 wrote:
Tue Jul 10, 2018 3:19 pm
Hi,

My company uses Fidelity for 401k services. I am 100% invested on VANG INST TR 2050.
I was checking my transaction history and I noticed I have administrative fees and record keeping fees. They are not high, they are something like 40-50usd per quarter.

Since my company allows using BrokerageLink, I was wondering if I can use BrokerageLink to setup something similar to VANG INST TR 2050 using fidelity mfs and avoid those fees.

Would I also be charged administrative fees and record keeping fees if I use BrokerageLink?

Thanks!
There would be fees no matter whar. Think about it, someone has to maintain the 401k databse and put out the needed documentation. Fidelity does get paid.

MarkVH0518
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by MarkVH0518 » Tue Jul 10, 2018 3:53 pm

Actually, it depends on the plan. The Megacorp I worked for did not charge for using Fidelity BrokerageLink, until they did.
Call Fidelity and ask them; ask them to show you where the fees are described in the fine print of your company's plan.
I find that Fidelity is very knowledgeable and open about questions like this.

So it's possible.
Good luck
Mark

SlowMovingInvestor
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by SlowMovingInvestor » Tue Jul 10, 2018 4:13 pm

Dottie57 wrote:
Tue Jul 10, 2018 3:33 pm
car733 wrote:
Tue Jul 10, 2018 3:19 pm
Hi,

My company uses Fidelity for 401k services. I am 100% invested on VANG INST TR 2050.
I was checking my transaction history and I noticed I have administrative fees and record keeping fees. They are not high, they are something like 40-50usd per quarter.

Since my company allows using BrokerageLink, I was wondering if I can use BrokerageLink to setup something similar to VANG INST TR 2050 using fidelity mfs and avoid those fees.

Would I also be charged administrative fees and record keeping fees if I use BrokerageLink?

Thanks!
There would be fees no matter whar. Think about it, someone has to maintain the 401k databse and put out the needed documentation. Fidelity does get paid.
Fidelity hopes that if you use brokeragelink, you may trade more or use funds that are more expensive (hence better for Fido). So you may not actually pay the general 401k fees, but if there is a separate BrokerageLink fee ($25/quarter), you might have to pay that.

Also, you can't invest in any fund available in your 401k plan through BrokerageLink.

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car733
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by car733 » Wed Jul 11, 2018 7:35 am

Dottie57 wrote:
Tue Jul 10, 2018 3:33 pm
There would be fees no matter whar. Think about it, someone has to maintain the 401k databse and put out the needed documentation. Fidelity does get paid.
Well, Vanguard also needs to get paid and they do not charge me fees.

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car733
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by car733 » Wed Jul 11, 2018 7:36 am

MarkVH0518 wrote:
Tue Jul 10, 2018 3:53 pm
Actually, it depends on the plan. The Megacorp I worked for did not charge for using Fidelity BrokerageLink, until they did.
Call Fidelity and ask them; ask them to show you where the fees are described in the fine print of your company's plan.
I find that Fidelity is very knowledgeable and open about questions like this.

So it's possible.
Good luck
Mark
After they started charging, you kept the BrokerageLink account?
I will call them and report back to this thread.

Thanks!

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prudent
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by prudent » Wed Jul 11, 2018 7:56 am

Rules for these arrangements are plan-specific. Our 401k calls these plans "Self-Directed Brokerage Accounts". Our 401k custodian is Prudential and that's the brokerage we must use. It's $100/year to have an SDBA. Commissions on trades are high - $19.95. But our company absorbs the recordkeeping and custodial fees for the 401k plan. Therefore for us, the choice to go with the SDBA is based on whether we save more than $100/year by using the SDBA to invest in lower cost funds than the 401k plan itself offers, after factoring in commissions.

I don't think the OP will avoid the fees by using BrokerageLink - it's still in the 401k account.

ryman554
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by ryman554 » Wed Jul 11, 2018 12:54 pm

One data point here:

I appears as if I avoid the fees. I know my ex- company started instituting $25/quarter fees or so before I left. I had some remainder funds stuck in a MM account due to an unexpected (and botched) after tax contribution and subsequent roth roll-over from a random bonus I was not expecting.

Anyhow, the MM account drained (and I saw it in the account history), but it was less than the $25 (since it was only like $8 left). I am not seeing a similar drain on my brokerage link.

So I might be avoiding fees, or they may be accumulating for a big hit when I move the money out and have to go through the 401(k) retail side for a day.

StrangePenguin
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by StrangePenguin » Wed Jul 11, 2018 1:21 pm

I enrolled in BrokerageLink in my company's 401k about 6 months ago. So it is possible that there are hidden fees that I have missed. But as far as I can tell, for me:
* for funds in my usual 401k plan (for instance Vanguard's VINIX S&P 500 index), I do pay quarterly fees ("Recordkeeping fee") to Fidelity
* for funds in BrokerageLink I seem to pay no fees at all

Everything I have read indicates that Brokeragelink fees vary a lot from employer to employer. So you have to check to see what applies to you.
But my experience so far suggests that moving funds to BrokerageLink does, in fact, save on fees.

Edit to add: I do not own any mutual funds in BrokerageLink -- only iShares ETFs.

augryphon
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by augryphon » Wed Jul 11, 2018 2:14 pm

I also have fidelity and have the bulk of my 401k in brokerage link. However, our plan requires that you leave at least 1% of you 401k in the main 401k specifically so they'll have funds available withdraw the record keeping charge out of the main 401k. In addition, you must put 1% or more of each payroll contribution in the main 401k. Our charge is ~$50 per year, and is the same regardless of how much money you have in your account. I'm a skinflint, so $50 in my pocket will last a month, but $50 is negligible when compared to my other fees, even thought I'm invested in very low-cost EFTs.

MarkVH0518
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by MarkVH0518 » Wed Jul 11, 2018 2:35 pm

car733 wrote:
Wed Jul 11, 2018 7:36 am

After they started charging, you kept the BrokerageLink account?
After they started charging I continued to use BrokerageLink.
I preferred buying Vanguard ETFs in the BrokerageLink over the fund available in the 401K plan

Dottie57
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by Dottie57 » Wed Jul 11, 2018 3:03 pm

car733 wrote:
Wed Jul 11, 2018 7:35 am
Dottie57 wrote:
Tue Jul 10, 2018 3:33 pm
There would be fees no matter whar. Think about it, someone has to maintain the 401k databse and put out the needed documentation. Fidelity does get paid.
Well, Vanguard also needs to get paid and they do not charge me fees.
There are no fees ? Some how the company needs to pay their people. Vanguard has great low cost funds but they are not a charity.

I didn’t see any fees in my Fidelity 401k. When I became a non employee , all of a sudden fees popped up. My employer had been paying the fees. My former employer tried many different 401k providers - looking for lower fees. They seem to have settled on Fidelity - it is the one the company has used the longest.

BTW, the Fidelity 401k has 3 Vanguard funds, plus other non Fidelity funds. No Fidelity funds.
I suspect your employer pays the record keeping fees for you.

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car733
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by car733 » Wed Jul 11, 2018 9:15 pm

Update: I called Fidelity. As MarkVH0518 said, everything is dependent on the plan. Future readers: call!

In my particular case, opening the BrokerageLink doesn't have a cost but the fees I am getting are because of the 401k. They are not going away because of investing in BrokerageLink.

The support person also mentioned that funds in BrokerageLink are more expensive than inside the 401k plan.

Conclusion: I will keep using 401k as I was.
Thanks for the replies!

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car733
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by car733 » Wed Jul 11, 2018 9:18 pm

Dottie57 wrote:
Tue Jul 10, 2018 3:33 pm
There are no fees ? Some how the company needs to pay their people. Vanguard has great low cost funds but they are not a charity.
Sure thing! I hoped that if I used a BrokerLink account and I invested my money in Fidelity funds, fees would be waived.

Dottie57
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Re: Can I use Fidelity's BrokerageLink to avoid 401k fees?

Post by Dottie57 » Wed Jul 11, 2018 10:40 pm

car733 wrote:
Wed Jul 11, 2018 9:18 pm
Dottie57 wrote:
Tue Jul 10, 2018 3:33 pm
There are no fees ? Some how the company needs to pay their people. Vanguard has great low cost funds but they are not a charity.
Sure thing! I hoped that if I used a BrokerLink account and I invested my money in Fidelity funds, fees would be waived.
Give Fidelity a call. They have good customer service.

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