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I am about to change jobs and would like to move my current 401 k with vanguard over to fidelity with my brokerage and roth IRA accounts to consolidate. If I roll them over can I keep the same funds I currently have with Vanguard or do I need to sell them and then buy new funds with Fidelity. Thanks for any help.
This is really a two part question: can the 401(k) distribute your shares in-kind (i.e. without converting to cash), and will Fidelity accept a transfer of those shares. On the first part I can give you an educated guess, and on the latter, a definite maybe.
A quick search on in-kind distributions from defined contribution plans keeps turning up the same thing in multiple places. Here's one of them (see p.3): "The new rules allow plan sponsors [your employer] to amend their plans to remove in-kind distributions of marketable securities ... and require cash distributions in their place. Mutual funds are an example of "marketable securities ..."
I read this to mean that plans may be written to allow the mutual fund shares to be distributed in-kind, but they don't have to be, and that even if they once allowed this, the employer may change the plan to require you to take your 401K in cash. So whether you can get the shares distributed (as opposed to cash) may depend on the terms in your particular 401k plan.
Assuming the Vanguard shares are distributed as fund shares, the second part of the question is whether Fidelity will accept them. Fidelity can hold some Vanguard share classes, but not all of them. If yours is one they cannot hold, then it is likely that they won't take it. (It is remotely possible that they'd do a conversion from one share class to another for you, but if they can't handle the initial class,I doubt they'd be able to do this.)
Maurice and msf cover all the bases of choices and considerations, with their replies. Any other answers will come from a call to Fido, 800-343-3548.
From my recall of about 4 years with a friend moving their Vanguard 401k via a rollover to a Fido IRA, he had to sell/close the Vanguard positions and the monies then moved as a total cash value to the Fido cash reserves.
He called Fido, who called Vanguard for a 3 way conference phone call; supplied account number info and some other data, and the xfer was in place in about 15 minutes, which included confirmation data/numbers; all of which could also be accessed to view at the Vanguard 401k account page. The new Fido IRA account monies were in place to be invested in two or three days.
Reply to @Derf: Like Mo I worked for a company who paid for all administration fees. These days it is becoming more common to find the companies to pass on the fee to the participants at some flat fee on quarterly basis. That is not too bad if the $ amount in 401K is sizable.
On a percentage basis, this amounts to like 12-b-1 fee commonly found in retailed mutual funds. 0.5% in my opinion is not cheap.
Thanks everyone for the comments. I have a decent sized 401 k at vanguard so may just go ahead and leave it be for the time being. I do have access to admiral shares that are not available at fido. Appreciate all the input and thoughts.
Comments
A quick search on in-kind distributions from defined contribution plans keeps turning up the same thing in multiple places. Here's one of them (see p.3): "The new rules allow plan sponsors [your employer] to amend their plans to remove in-kind distributions of marketable securities ... and require cash distributions in their place. Mutual funds are an example of "marketable securities ..."
I read this to mean that plans may be written to allow the mutual fund shares to be distributed in-kind, but they don't have to be, and that even if they once allowed this, the employer may change the plan to require you to take your 401K in cash. So whether you can get the shares distributed (as opposed to cash) may depend on the terms in your particular 401k plan.
Assuming the Vanguard shares are distributed as fund shares, the second part of the question is whether Fidelity will accept them. Fidelity can hold some Vanguard share classes, but not all of them. If yours is one they cannot hold, then it is likely that they won't take it. (It is remotely possible that they'd do a conversion from one share class to another for you, but if they can't handle the initial class,I doubt they'd be able to do this.)
Any other answers will come from a call to Fido, 800-343-3548.
From my recall of about 4 years with a friend moving their Vanguard 401k via a rollover to a Fido IRA, he had to sell/close the Vanguard positions and the monies then moved as a total cash value to the Fido cash reserves.
He called Fido, who called Vanguard for a 3 way conference phone call; supplied account number info and some other data, and the xfer was in place in about 15 minutes, which included confirmation data/numbers; all of which could also be accessed to view at the Vanguard 401k account page. The new Fido IRA account monies were in place to be invested in two or three days.
Regards,
Catch
Have a good weekend, Derf
On a percentage basis, this amounts to like 12-b-1 fee commonly found in retailed mutual funds. 0.5% in my opinion is not cheap.