Fidelity 401(k) fees

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barrybonds282
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Fidelity 401(k) fees

Post by barrybonds282 »

I have a 401(k) with Fidelity. The admin and record keeping fees are a flat $80 per year. It's in a Target Retirement fund and I don't intend on making any trades. My concern is the fees for when I start withdrawing money in retirement...Do they fleece you with fees there? I am aware of the early withdrawal tax penalties and am just concerned with the fees charged by Fidelity. I chatted with a Fidelity rep and they said there were no withdrawal fees, but are they locked into that commitment until the end of time?
Navillus1968
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Re: Fidelity 401(k) fees

Post by Navillus1968 »

Depending on your age at retirement, you could easily do a rollover of your 401k to an IRA at Schwab, Fidelity, Vanguard (or a host of other discount brokers), begin withdrawing money and never pay an annual fee again. This option requires you to reach age 59.5, although there are other ways to access IRA money before 59.5 penalty-free.

If you retire after 55 but before 59.5, your last employer's 401k offers penalty-free withdrawals. This option is not a feature of any type of IRA. If you retire after 59.5, this point is moot.
MrJedi
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Re: Fidelity 401(k) fees

Post by MrJedi »

Fees in a 401(k) are setup between the employer and the plan administrator. You will need to find the exact details in your plan as each plan can be setup differently. Fidelity is just following what the employer wanted to order in the plan setup.
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retired@50
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Re: Fidelity 401(k) fees

Post by retired@50 »

barrybonds282 wrote: Thu Mar 16, 2023 8:34 am I have a 401(k) with Fidelity. The admin and record keeping fees are a flat $80 per year. It's in a Target Retirement fund and I don't intend on making any trades. My concern is the fees for when I start withdrawing money in retirement...Do they fleece you with fees there? I am aware of the early withdrawal tax penalties and am just concerned with the fees charged by Fidelity. I chatted with a Fidelity rep and they said there were no withdrawal fees, but are they locked into that commitment until the end of time?
Check your 401k plan document called the Summary Plan Description.

The document should discuss all fees related to the plan. Withdrawal fees (if any), administrative fees, 401k loan fees, check writing fees, you name it fees... :(

The flat $80 sounds like it's "not bad" as far as fees go that we tend to see here on the forum.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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WallyBird
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Re: Fidelity 401(k) fees

Post by WallyBird »

I assume this is with your current employer. Once you leave their employ, it's a fairly trivial matter to have Fidelity rollover the account to a Fidelity IRA. They can usually do an in-house rollover "in kind" which means that the securities move from the 401k account to the new rollover account without having to be sold.

Are you sure the $80 fee gets billed to you and not the employer? A quick call to Fidelity should answer that question.
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SimonJester
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Re: Fidelity 401(k) fees

Post by SimonJester »

My wife's 401k from previous employer through Fido is getting hit with a 7.50 fee per quarter which is not too bad. Her current 401k not with Fido charges her $68 per quarter and its going up as her balance does. Its highway robbery for holding only a single S&P index fund...

My own 401k through Fido has no fees (everything paid by my employer).


Her current employer is merging with her old employer so we are hoping they will transfer everything over to her old 401k and it becomes the active plan again...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
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Stinky
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Re: Fidelity 401(k) fees

Post by Stinky »

barrybonds282 wrote: Thu Mar 16, 2023 8:34 am I have a 401(k) with Fidelity. The admin and record keeping fees are a flat $80 per year. It's in a Target Retirement fund and I don't intend on making any trades. My concern is the fees for when I start withdrawing money in retirement...Do they fleece you with fees there? I am aware of the early withdrawal tax penalties and am just concerned with the fees charged by Fidelity. I chatted with a Fidelity rep and they said there were no withdrawal fees, but are they locked into that commitment until the end of time?
As stated upthread, the fees you’re paying on your 401(k) are based on the arrangement your employer has with Fidelity.

Fidelity has a defined level of charges for 401(k) administration. The more the employer pays Fidelity from its own money, the less that plan participants will be expected to pay.

At my former employer (also a Fidelity client), the fees for former employees (including retirees) who left money in the 401(k) were double what they were for active employees. So when you find out more about fees, you might check into that too.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
peteyboy
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Re: Fidelity 401(k) fees

Post by peteyboy »

When an employer sets up a 401k they need an administrator to maintain the account, keep track of things, issue 1099-R forms, ensure IRS compliance, etc. This costs money and it's one way brokerage houses make money - by offering this service...for a fee. Often times the employer will pass that fee onto the employee in part or whole...thus the $80 annual fee. I'd say amount wise that's par for the course.

To your other question. Fidelity, and for that matter, the other big two (Vanguard and Schwab) 401k providers don't charge fees for distributions, withdrawals, etc. And in their standard brokerage account they typically don't charge an annual account (maintenance) fee. Will that change in the future? Anything is possible, but it's unlikely as people would simply move to a brokerage that didn't charge that fee. Competition keeps this in check. I wouldn't worry about Fidelity doing something nefarious on the fee front. If they did it would blow up this Bogleheads forum.
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Wiggums
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Re: Fidelity 401(k) fees

Post by Wiggums »

My employer started to charge a $75 annual 401k fee as the company doubled in size. A small fee is quite common and nothing to worry about.
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Topic Author
barrybonds282
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Re: Fidelity 401(k) fees

Post by barrybonds282 »

I have reviewed the "Required Disclosure Information" document for my plan. I notice the following fees:
In-Service Withdrawal Fee: $25 per transaction (does anybody know what this means?)
Minimum Required Distribution Fee: $25.00 per distribution year (an automatic $25 fee every year I need to do a required minimum distribution?)

Looks like fees I will have to incur once I start withdrawing money. I get a generous match from my employer, which I max out, but I'm hesitant to put more money into the 401(k) for fear of getting fleeced with fees. I'm already 100% in a Target date fund to minimize transactions and the associated fees.

Also the document says: "please keep in mind that fees are subject to change".

Thank you for your help.
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retired@50
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Re: Fidelity 401(k) fees

Post by retired@50 »

barrybonds282 wrote: Tue Mar 21, 2023 2:09 pm I have reviewed the "Required Disclosure Information" document for my plan. I notice the following fees:
In-Service Withdrawal Fee: $25 per transaction (does anybody know what this means?)
Minimum Required Distribution Fee: $25.00 per distribution year (an automatic $25 fee every year I need to do a required minimum distribution?)

Looks like fees I will have to incur once I start withdrawing money. I get a generous match from my employer, which I max out, but I'm hesitant to put more money into the 401(k) for fear of getting fleeced with fees. I'm already 100% in a Target date fund to minimize transactions and the associated fees.

Also the document says: "please keep in mind that fees are subject to change".

Thank you for your help.
One easy way to sidestep the withdrawal fees is to rollover the 401k balance after you retire to an IRA. The big firms, like Vanguard, Fidelity, and Schwab won't charge a fee to make a withdrawal.

For now, the ongoing fee you're certainly paying is the expense ratio for the target date fund. Do you know what the expense ratio is?
Hopefully, it's less than 0.15%. If so, then I'd be happy to save as much as possible in the 401k plan.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Stinky
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Re: Fidelity 401(k) fees

Post by Stinky »

barrybonds282 wrote: Tue Mar 21, 2023 2:09 pm I have reviewed the "Required Disclosure Information" document for my plan. I notice the following fees:
In-Service Withdrawal Fee: $25 per transaction (does anybody know what this means?)
Minimum Required Distribution Fee: $25.00 per distribution year (an automatic $25 fee every year I need to do a required minimum distribution?)

Looks like fees I will have to incur once I start withdrawing money. I get a generous match from my employer, which I max out, but I'm hesitant to put more money into the 401(k) for fear of getting fleeced with fees. I'm already 100% in a Target date fund to minimize transactions and the associated fees.

Also the document says: "please keep in mind that fees are subject to change".

Thank you for your help.
An in-service withdrawal is when you transfer money out of your plan to an IRA while you’re still employed. You’ll need to read your plan documents to see what types of in service withdrawals are permitted under your plan.

An RMD fee would apply only if you’re taking RMDs from the 401k plan. You aren’t required to take RMDs until you’re 73. And many folks (myself included) roll their 401k assets well before age 73 to an IRA at a place like vanguard to avail themselves of the broader selection of investments available at a brokerage like Vanguard.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
dbr
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Re: Fidelity 401(k) fees

Post by dbr »

Just be aware that in a handful of states IRAs do not have the non-bankruptcy liability protection a 401k has.
Clarky
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Re: Fidelity 401(k) fees

Post by Clarky »

dbr wrote: Tue Mar 21, 2023 2:59 pm Just be aware that in a handful of states IRAs do not have the non-bankruptcy liability protection a 401k has.
California has a needs test arrangement. How old are you, do you have earnings to replace the funds, etc. But if it’s a rollover IRA it retains the protection. You must check the rollover box when moving your 401k. Then you’re good. In California.
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