SIMPLE IRA - Transfer of Funds from Edward Jones to Fidelity (Send help!)

[teen persuasion]

Have you checked with Fidelity about which funds you can access in their SIMPLE IRA? When I looked earlier this year, I couldn't see any low cost index funds on Fidelity's SIMPLE IRA allowed funds.

I do remember that Vanguard also only did 5305 accounts. Schwab did 5304, though. The forms for employer and employee were right on Schwab's website to print off and fill in, very clear and simple with only a few questions, and clearly stated what the default positions were if you didn't fill in a question.

[krow36]

Have you checked with Fidelity about which funds you can access in their SIMPLE IRA? When I looked earlier this year, I couldn't see any low cost index funds on Fidelity's SIMPLE IRA allowed funds. It sure does look like there are no index funds on the Fidelity SIMPLE IRA fund list! So much for Fidelity's big ad campaign touting their low and no cost index funds.
https://fundresearch.fidelity.com/mutua ... nvestments
There are no restrictions on the funds available in Vanguard's SIMPLE IRA. I think you should choose Vanguard rather than Fidelity!

I do remember that Vanguard also only did 5305 accounts. Schwab did 5304, though. The forms for employer and employee were right on Schwab's website to print off and fill in, very clear and simple with only a few questions, and clearly stated what the default positions were if you didn't fill in a question.

The fact that both Fidelity and Vanguard are willing to offer a SIMPLE IRA account for a Form 5304 refugee from another FI indicates that they do not need to use a Form 5304.

[retiredjg]

The fact that both Fidelity and Vanguard are willing to offer a SIMPLE IRA account for a Form 5304 refugee from another FI indicates that they do not need to use a Form 5304.

I don't think one can reach this conclusion.

I doubt that an employer can offer both a 5304 and a 5305 SIMPLE at the same time. That looks like two different retirement plans to me, something that is generally prohibited.

I'm thinking that Schwab may be the solution in this case since the employer already seems committed to 5304.

[A_Bond]

Thank you all for your opinions and info, I am weighing it all right now.

I specifically asked the Fidelity rep if ALL of the Fidelity index funds were available in their SIMPLEs. He said yes. I see he may have been 'mistaken'.

I am also still waiting for the Vanguard rep to email me back before proceeding further with anything.

[Spirit Rider]

Here is where it gets a bit funky and this group's help is probably needed. Fidelity sets up all of the SIMPLE IRAS under a Form 5305 DFI, not a Form 5304. Could this cause any issues for the EMPLOYER by having a bunch of SIMPLE accounts set up under a 5304 (other employees) and a 5305 (for me). The Fidelity rep didn't think so, but any second, third or more opinions would be fantastic.

I ave been traveling for a few days and not following this thread.

Somehow this has all gotten confused. If your employer has a 5304-SIMPLE IRA plan, you are allowed to choose the SIMPLE IRA custodian of your choice. However, it is still the same 5304-SIMPLE IRA plan with multiple custodians. I do not know if Fidelity supports 5304-SIMPLE IRA custodial accounts, but you are not setting up a 5305-SIMPLE IRA at Fidelity. It is the employer who files the paperwork with the SIMPLE IRA custodian to open the account under their existing 5304-SIMPLE IRA plan.

When you are talking to an IRA custodian. You need to be clear that you are a employee participant in your employer's existing 5304-SIMPLE IRA plan and you want to choose your own financial institution for a 5304-SIMPLE IRA account under that plan. How does your employer accomplish that.

It is not an employer adopting a new adopting a new 5305-SIMPLE IRA plan.

[wildungar2000]

Thank you all for your opinions and info, I am weighing it all right now.

I specifically asked the Fidelity rep if ALL of the Fidelity index funds were available in their SIMPLEs. He said yes. I see he may have been 'mistaken'.

I am also still waiting for the Vanguard rep to email me back before proceeding further with anything.

I do not know if Fidelity supports 5304-SIMPLE IRA custodial accounts

Pretty much this entire thread was what I went through 1 year ago. FYI, when I called Fidelity in Dec. 2018 and they informed me they do not support 5304-SIMPLE IRAs.

Just like the OP, I also was led to believe my employer was using Form 5305, but then when I finally got the Form I found out it was 5304. I ended up going with Vanguard and am just 100% VTSAX. In terms of Vanguard paperwork, you will need to fill out and give your employer the "SIMPLE IRA New Account Form" which is a 6 page form. Then your employer needs to mail that form to Vanguard along with their 4 page employer application form.

[retiredjg]

Here is where it gets a bit funky and this group's help is probably needed. Fidelity sets up all of the SIMPLE IRAS under a Form 5305 DFI, not a Form 5304. Could this cause any issues for the EMPLOYER by having a bunch of SIMPLE accounts set up under a 5304 (other employees) and a 5305 (for me). The Fidelity rep didn't think so, but any second, third or more opinions would be fantastic.

I ave been traveling for a few days and not following this thread.

Somehow this has all gotten confused. If your employer has a 5304-SIMPLE IRA plan, you are allowed to choose the SIMPLE IRA custodian of your choice. However, it is still the same 5304-SIMPLE IRA plan with multiple custodians. I do not know if Fidelity supports 5304-SIMPLE IRA custodial accounts, but you are not setting up a 5305-SIMPLE IRA at Fidelity. It is the employer who files the paperwork with the SIMPLE IRA custodian to open the account under their existing 5304-SIMPLE IRA plan.

When you are talking to an IRA custodian. You need to be clear that you are a employee participant in your employer's existing 5304-SIMPLE IRA plan and you want to choose your own financial institution for a 5304-SIMPLE IRA account under that plan. How does your employer accomplish that.

It is not an employer adopting a new adopting a new 5305-SIMPLE IRA plan.

It took me awhile, but I think what you are saying is that even though Fidelity does not offer a 5304 SIMPLE IRA plan, they may be willing to set up and hold an account under the employer's 5304 plan.

Is that right?

[Spirit Rider]

It took me awhile, but I think what you are saying is that even though Fidelity does not offer a 5304 SIMPLE IRA plan, they may be willing to set up and hold an account under the employer's 5304 plan.

Is that right?

Yes, a SIMPLE IRA custodian can open just an individual account under an existing 5304-SIMPLE IRA plan. However, in the post immediately previous to yours @wildungar2000 indicated a year ago Fidelity would not do so. On the other hand, Vangurd who like Fidelity only offers 5305-SIMPLE IRA plans, will do so.

[retiredjg]

Thanks. In that case, maybe Vanguard is a solution.

[Spirit Rider]

Thanks. In that case, maybe Vanguard is a solution.

It appears so. EDITED

I was incorrect about Schwab, their plan document refers to a 5305. They also state this; "*Note: Schwab does not accept the 5305 or 5304 IRS Model Plan, or any other provider’s Model Plan". So they may not open accounts under another providers 5304 plan.

[A_Bond]

@Spirit Rider, That explanation was very helpful. It is a lot clearer for me now, thank you!

@wildungar2000, I just got a response (finally) from Vanguard, they indeed sent me forms identical to what you just described.

I find it somewhat humorous that in a roundabout way, I am almost right back to where I started. Looking to Vanguard for the solution. I will go in this direction and will update you all once I have more info in hand.

[A_Bond]

UPDATE - I compiled all of the info I had and sent it on to my employer. Thanks to the info I have received here and from Vanguard themselves, I was able to explain it clearly. The employer will fill out the paperwork as soon as I can get it to them!!!

The only last bit of clarification I really need is this. Am I correct in assuming that this is for a calendar year starting on January 1st and that the date of effect should reflect that when filling out the forms?

[retiredjg]

This is good news and yes, the new plan starts in January as far as I know.

[A_Bond]

This is good news and yes, the new plan starts in January as far as I know.

Indeed it is! I checked the IRS website and did confirm the January 1st start date.

I can't wait to finally get this all settled. Once the dust clears, I'll probably add a condensed version of this experience to the original post. Hopefully, others can learn from this!

[retiredjg]

And don't forget to transfer the money already in the EJ account over to your new one. I'd wait till things are going smoothly before doing that.

[A_Bond]

And don't forget to transfer the money already in the EJ account over to your new one. I'd wait till things are going smoothly before doing that.

Oh, for sure! That is one of the first things I plan on doing once I get this up and running in January. Now, I just need to decide what index funds I want to jump into. (Not sure if I want to eat the $25.00 per fund fee x 3 to create a three-fund portfolio or if I just want to go into a total market or a target-date fund to save a few bucks.)

[krow36]

Are you a Voyager client? That requires that your and your immediate family’s Vanguard balance is over 50k.

SIMPLE IRA FEES
$25 for each Vanguard mutual fund in each account.
HOW YOU CAN AVOID THE FEE
We'll waive the fee if you're a Voyager, Voyager Select, Flagship, or Flagship Select client. https://investor.vanguard.com/investing/account-fees

It's great to see a EJ-SIMPLE IRA thread that has a successful Vanguard outcome! Congratulations!

[A_Bond]

Are you a Voyager client? That requires that your and your immediate family’s Vanguard balance is over 50k.

SIMPLE IRA FEES
$25 for each Vanguard mutual fund in each account.
HOW YOU CAN AVOID THE FEE
We'll waive the fee if you're a Voyager, Voyager Select, Flagship, or Flagship Select client. https://investor.vanguard.com/investing/account-fees

It's great to see a EJ-SIMPLE IRA thread that has a successful Vanguard outcome! Congratulations!

I am not a Voyager client. My main accounts are actually currently with Fidelity.

Thank you! I really couldn't have worked through this without the help of this forum.

[A_Bond]

Minor update. The paperwork was sent off early this week and is probably in the hands of Vanguard as I type. Now to wait...

I know this isn't a large time span, but I did find this interesting. In the few months that I have had my EJ account open, I have had a rate of return of .47%. The S&P 500 has seen a return of 3.34% during that same period of time. I would love to have some of those 'average' returns right about now!

[A_Bond]

Another minor update. The account is setup and web access is functioning - all ready for the contributions starting in January. I can say, that Vanguard's website is not nearly as good as Fidelity's, which I much prefer. Once again, I could not have sifted through this SIMPLE IRA process without the help of this forum. Thank you all!

[krow36]

Glad to learn that it's all set up at Vanguard! Thanks for the update.