Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Article requires subscription and I couldn't find an open alternative.
I have done withdrawals from my TIAA 403b and Fidelity 403b. Note that for most part, nonprofit 403b are similar to company 401k.
My TIAA 403b allows online withdrawal and I can designate a specific fund for withdrawal. The other choice is proportionate withdrawal. Tax witholding rate can also be specified.
My Fidelity 403b doesn't allow online withdrawal and I have to call them. It's default is proportional withdrawal, but I can request withdrawal from a specific funds. Tax witholding rate can also be requested. BUT I learned one thing - I have to tell the Fido Rep upfront about withdrawal from specific funds, otherwise, he/she has to redo the entire transaction.
One year, I made the fund request at the end, and the Fido Rep said that he would try to fix it, but the confirmation showed proportionate withdrawal. I let it go because reversing and redoing transactions with 403b could be a headache for both Fidelity and me. But now, as soon as I get to the Rep, I mention that I want to withdraw AND from a specific fund.
I didn't hear about withdrawal hierarchy before, but I see on web search that some plans may do that. Anyway, I didn't encounter it in my 403b plans at TIAA or Fidelity. I am aware that plans at the same firm can have different rules.
Edit/Add. Post title and content could be more descriptive.
The author needed to take some money from his 401-K retirement plan at Fidelity. While he specified to an agent and believed the $$ would be taken from his “more aggressive” (riskier) holdings, Fidelity took it from his money market account in accordance with the 401-K plan administrator’s governing rules. Leaves unanswered why he didn’t then have them balance things out by transferring some money out of riskier positions and into the now depleted money market fund?
Sounds more like a failure of communication or misunderstanding of his 401-K plan rules rather than an issue of trust. It’s unfortunate that some plans (per Yogi’s comment) do not allow online trades or withdrawals. In hindsight, the complainant might have first done a “test” withdrawal in a smaller amount to better understand the process before withdrawing a larger sum. Did an agent misunderstand the initial request and fail to comply? Probably. Does it represent a breach of trust? Questionable - since Fidelity followed the rules.
Nowhere in the article does the author, Michael Siconolfi, mention an issue of “trust”. His message: “When withdrawing funds from your retirement account, be sure to check on the redemption protocols or you could unwittingly raise your risk profile”.
MrsRuffles has a couple of inherited retirement accounts at TIAA. Even though TIAA has an option to select which funds should be drawn from for a distribution, this isn’t available on her accounts. (When we asked why, we were basically told it’s just not available for her accounts.)
We have to call in (and it’s become more difficult to talk to an actual human), and designate how distributions should be drawn. Even then, we’ve had times where despite our explicit instructions, the distribution was still taken on a proportional basis so we had to call in to get it reversed and corrected. So we only take an annual distribution to minimize the hassle.
Her inherited accounts at Fido let us designate online the percentage withdrawals for distributions either on an ad hoc or recurring basis, The major issue we’ve encountered there is having to find the webpage where this magic happens since it is somewhat obscured and takes us to a dated interface.
}}}}}}} Nowhere in the article does the author, Michael Siconolfi, mention an issue of “trust”. His message: “When withdrawing funds from your retirement account, be sure to check on the redemption protocols or you could unwittingly raise your risk profile”.
No, he does not use the word, trust. But that's the issue. Unless what any intelligent, ordinary person would ordinarily expect should just not be expected. Fidelity is playing a "fine print" game. Glad I went elsewhere to find a brokerage when I made the switch. Schwab is not perfect, either, but I've not run into that sort of subterfuge.
>> 'Fidelity told me it would pull the money “pro rata”—or proportionately—out of all my investment holdings in the 401(k) plan. ... In a March letter, the company wrote: “We apologize that you were misinformed regarding plan rules for this withdrawal.”'
Comments
I have done withdrawals from my TIAA 403b and Fidelity 403b. Note that for most part, nonprofit 403b are similar to company 401k.
My TIAA 403b allows online withdrawal and I can designate a specific fund for withdrawal. The other choice is proportionate withdrawal. Tax witholding rate can also be specified.
My Fidelity 403b doesn't allow online withdrawal and I have to call them. It's default is proportional withdrawal, but I can request withdrawal from a specific funds. Tax witholding rate can also be requested. BUT I learned one thing - I have to tell the Fido Rep upfront about withdrawal from specific funds, otherwise, he/she has to redo the entire transaction.
One year, I made the fund request at the end, and the Fido Rep said that he would try to fix it, but the confirmation showed proportionate withdrawal. I let it go because reversing and redoing transactions with 403b could be a headache for both Fidelity and me. But now, as soon as I get to the Rep, I mention that I want to withdraw AND from a specific fund.
I didn't hear about withdrawal hierarchy before, but I see on web search that some plans may do that. Anyway, I didn't encounter it in my 403b plans at TIAA or Fidelity. I am aware that plans at the same firm can have different rules.
Edit/Add. Post title and content could be more descriptive.
https://archive.ph/6Plqr
https://archive.ph/
I am familiar with Internet Archives and WayBack Machine, but those are not as current.
https://archive.org/
https://web.archive.org/
Sounds more like a failure of communication or misunderstanding of his 401-K plan rules rather than an issue of trust. It’s unfortunate that some plans (per Yogi’s comment) do not allow online trades or withdrawals. In hindsight, the complainant might have first done a “test” withdrawal in a smaller amount to better understand the process before withdrawing a larger sum. Did an agent misunderstand the initial request and fail to comply? Probably. Does it represent a breach of trust? Questionable - since Fidelity followed the rules.
Nowhere in the article does the author, Michael Siconolfi, mention an issue of “trust”. His message: “When withdrawing funds from your retirement account, be sure to check on the redemption protocols or you could unwittingly raise your risk profile”.
We have to call in (and it’s become more difficult to talk to an actual human), and designate how distributions should be drawn. Even then, we’ve had times where despite our explicit instructions, the distribution was still taken on a proportional basis so we had to call in to get it reversed and corrected. So we only take an annual distribution to minimize the hassle.
Her inherited accounts at Fido let us designate online the percentage withdrawals for distributions either on an ad hoc or recurring basis, The major issue we’ve encountered there is having to find the webpage where this magic happens since it is somewhat obscured and takes us to a dated interface.
No, he does not use the word, trust. But that's the issue. Unless what any intelligent, ordinary person would ordinarily expect should just not be expected. Fidelity is playing a "fine print" game. Glad I went elsewhere to find a brokerage when I made the switch. Schwab is not perfect, either, but I've not run into that sort of subterfuge.
https://www.wsj.com/finance/investing/401k-withdraw-funds-hierarchy-risk-profile-cb03b136?st=BQbUvB&reflink=article_email_share
yeah, that is seriously messed up
the thread hed is misleading, though