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Rollovers: There has to be a better way

My wife and I are trying to rollover the funds in our workplace 401Ks since we both retired several years ago. We are trying to consolidate all of our accounts at Fidelity, where we both have IRAs. The problem is that we have to liquidate or sell all of our 401K funds and then wait in limbo for the checks to arrive at Fidelity to reinvest. We would prefer to keep our funds invested. Every time I have rolled over funds in the past, I’ve come out for worse. That is, the markets rose during the time period while I was waiting for the rollover check to arrive and be available to reinvest.

In these days of instant electronic transactions, it’s ridiculous that rollovers can’t be handled instantly or at least within the same day. I’ve seen too many instances over the years when the markets make huge shifts in a few days. Why should investors have to wait in limbo? We could lose thousands of dollars waiting for a check to arrive.

Comments

  • Excuse me for playing Mr. Obvious but can't you just let Fidelity handle the transfer for you? I don't know what fund(s) you may have in your 401k but if Fidelity also carries them it's a simple matter of a transfer-in-kind.
  • I am also in the midst of a transfer-rollover to consolidate funds. Unfortunately, the current account doesn’t do e-transfers. They also need to confirm that I’m no longer at my previous employer.
  • My daughter recently had a hard time getting a couple of modest 401-k accounts rolled over fo Fidelity. Her employer was bought out, the retirement plan changed hands twice and wound up in the hands of Transamerica. I believe part of the delay was caused by people working at home without the ability to call in a superior or a colleague to solve a problem quickly. The several times she called back it was a different rep and on and on. Finally Fidelity returned to my daughter the physical check sent to them by Transam with the notation that it could not be deposited for no understandable reason. Weeks later it turned out Fidelity had flagged her account because my daughter worked overseas for many months in 2020-21 and the flag had to be lowered. PITA.
  • edited June 22
    Had that surprise experience in the past. Fidelity only allows Fidelity funds to transfer-in-kind in rollover transfer. The rest of non-Fidelity funds are sold and transfer as cash. Fidelity was our 401(k) administrator and we were not please.

    We sold the positions ourselves over several weeks near the market high and initialized the rollover process.
    Luckily the market stayed relatively flat until it was completed 2 weeks later. I would do several partial rollover transfer if I would redo the rollover.
  • Our 401K is currently invested in proprietary funds with Prudential. So, we can't do an in-kind transfer of funds. In my experience from previous rollovers, it takes at least 7-10 days for the money to show up in my IRA. In theory, we could get lucky and the markets could drop during that time lag, but it's never worked out that way in various rollovers I've done over the years.
  • Aw geez, there's the issue. Being self-employed I've never experienced the joys of a 401k. Furthermore, the funds I've transferred in kind have been from IRA accounts at a different brokerage to Fidelity. Apologies for not having my thinking cap on.
  • You are in the same situation we were a number years ago. We were mostly lucky that the market stayed most flat during the transfer process. We had to reinvest quickly to maintain the same % allocation. It is your call when to make the rollover. If there is sizable $, I would ask the administrator if partial rollover is allowed.
  • Tarwheel: quite right. Everything is instantaneous and smooth and quick and convenient until you and I need it to be quick and smooth and instantaneous and convenient. Sucks. You might think that boneheads are in charge, everywhere. And you'd be right.
  • edited June 22
    IRA to IRA transfer between brokerages is straight forward. Proprietary funds commonly used in 401(k) pose a different set of challenges. The other option is leave the $ there but that is not the question being posted here.

    In the long run, timing is perfectly is probably not as important. Also the market is near all time high right now.
  • Suggest you use the search tool here , type in rollover. This has been hashed over a time or two .
    Stay Kool, Derf
  • The best I was able to do (helping someone else with their account) was to liquidate, rollover cash electronically to an IRA run by the same institution, buy ETFs (no commission), then transfer the IRA in-kind to the place where the friend really wanted the IRA.

    A day or two in cash, as opposed to a week or more using a paper check. This only works if your 401k institution also offers DIY IRAs. It may be faster (less time out of the market) but this bucket brigade is definitely not easier.

    There is the exception to liquidating, as Sven noted, of transferring house funds in-kind. I did that with my self-employment 401k (aka individual or solo 401k) at T. Rowe Price.
  • Our IRA and 401K transfers to Fidelity are mostly completed. The rollovers of our Roth IRAs from T.Rowe Price to Fidelity were seamless because we did in-kind transfers, so nothing had to sold or bought. The TRP funds showed up in our Fidelity accounts within two days, with no time out of the markets.

    The 401K rollovers were more troublesome but not a disaster. All of the funds with Prudential had to be sold because they were proprietary funds that couldn’t be transferred in kind. However, Prudential was able to mail the checks overnight, so the money showed up in our Fidelity accounts in a couple of days. Unfortunately, the markets went up every day while our funds were in limbo, so we “lost” money in the process— probably a couple of thousand dollars. In the long run, it will probably be worth it having all of investments in one place, particularly when it’s time to take required distributions.

    Fidelity’s website is far superior to TRP and Prudential, so it’s much easier now to track all of our investments, make changes and research offerings. Fidelity has far more investment options as well. We also have an advisor at Fidelity that we really like, which would be essential if I die before my wife, who has no interest in investing.
  • edited June 30
    We had similar experience with Fidelity as @Tarwheel on rollover transfer. I discussed how I was going to transfer with a Fidelity representative ahead of time. Sold all proprietary funds and other NOT on Fidelity NTF platform and let the rest transfer-in-kind. As noted above, the entire transfer took less than one week to complete.

    Concur that Fidelity’s website runs smoothly and have solid person support on phone or online chat. Did not quite appreciate these features until the pandemic last year. Also Fidelity has other tools to calculate for retirement $ and asset allocation in order to meet your project goal (in probability term or at least an estimate). Vanguard has a similar tool but they are not as intuitive and organize all in one place. This would really help to work with an advisor sometime down the road if you wish to.
  • We also have an advisor at Fidelity that we really like, which would be essential if I die before my wife, who has no interest in investing.

    From Fidelity (all bolding is by Fidelity):
    Our brokerage products and services for retail investors are provided to you through Fidelity Brokerage Services ...

    When we act as a broker for you, our primary role, as described in your Fidelity Brokerage Account Agreement, is to accept orders and execute transactions in your Fidelity Brokerage Account based on your instructions. You, or your authorized representative, direct all trading and are responsible for all investment decisions in your Fidelity Brokerage Account.

    Some of our brokerage representatives also hold insurance licenses which allow them to sell life insurance and annuities.... Our brokerage representatives may also make referrals ...acting in a broker-dealer, and not an investment adviser, capacity.

    When we act as a broker for you, we also offer you investment education, research, planning assistance, and guidance designed to assist you in making decisions on the various products that you may wish to hold. ... [These services] are part of, and considered to be incidental to, the brokerage services that we provide.
    Unless we specifically state otherwise, Fidelity is acting as a broker-dealer with respect to your account and as a broker-dealer and insurance agent with respect to any insurance product.

    When we act as your broker, we are ... [required to] ... Have reasonable grounds for believing that any security that we specifically present to you is suitable given your investment objectives, risk tolerance, financial and tax status and other financial information you have disclosed to us. ...

    When we act in a brokerage or insurance agency capacity, we do not have a fiduciary or advisory relationship with you and our disclosure obligations are more limited than if we did. ...

    If you ask us to provide investment advisory services we will do so only pursuant to a written agreement that describes our investment advisory relationship with you and our obligations to you.
    http://personal.fidelity.com/accounts/services/BD-IA-Dscls.pdf
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