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Rolling my Fidelity 401k to Vanguard IRA…

April 18, 2008

… was super easy so far! I couldn’t complete the process 100% online (which is something I strive to do in every transaction of life), but it just took one easy phone call to Vanguard, who got Fidelity on the line, and the wheels are in motion!

Apparently Fidelity insists on sending a check (made out to Vanguard) to ME, and I forward it onto Vanguard. Seems weird, but I had done some Googling in advance and expected it. They said it will take 7-10 days, or I could pay $25 to get express mail. I’ll be waiting the 7-10 days.

The transaction was at the price of Wednesday’s closing markets, which i thought was great since we had over a 2% jump in all the major indices that day. That was pure luck of timing, something I forgot to even consider. A good portion of my money is out of the market for a total of about 2 weeks, so if the market is going to crash, I’d prefer it happens in that time period. I’d also appreciate any major rally’s to wait until my money gets back in (looking at how today is starting, I may be out of luck). I know “timing the market” is futile, but doesn’t it seem like it would be prudent to watch for these huge 2% jumps/drops when moving 60% of my retirement portfolio around? What if I miss a really great day because my money couldn’t be transfered online instantly? I don’t understand why the process is so manual, but what can I do?

If everything goes smoothly, I will add in my meager pension cash out money immediately after the 401k money is rolled over. I have to wait since the amount is below the 3k per fund minimum.

My last consideration is my Roth IRA. It is currently 100% invested in a fidelity target date fund, which is nothing to worry about. It would be nice to have it at Vanguard with my other money, but there is a $50 fee to transfer the account and I’m not entirely unhappy with the fund as is, so maybe I’ll just leave it. It just is harder to figure into an asset allocation plan, especially sine the Fidelity target date funds don’t have quite as straightforward holdings as the Vanguard ones.

Taking care of this has been on my “to do” list for months, so it feels nice to actually be doing it.

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6 Comments leave one →
  1. tom permalink
    April 18, 2008 12:23 pm

    Regarding your Fidelity Target Date fund… I would compare the expense ratio of it to the same fund at Vanguard. If it is the same or lower, then keep it at Fidelity. If not, that $50 will be nothing compared to the long term fees you’ll be paying with Fidelity.

    On another note, I really like my Vanguard 2050 fund. It is very well diversified in the funds I would buy if I could cover the minimum investments. I should mention that I have not looked into Fidelity…

  2. tom permalink
    April 18, 2008 12:30 pm

    Ok… I checked them both out…

    Expense Ratio:
    Fidelity 2040 .84%
    Vanguard 2040 .21%

    So I did a quick calculation using Vanguards cost calculator and w/ a $10,000 investment and 9% return over 20 years the total value of each fund would be:

    Fidelity 2040: $47,534
    Vanguard 2040: $53,736

    Just some food for thought on how fees can eat away at your earnings…

  3. April 18, 2008 12:52 pm

    Yay for easy investment transactions!

    I’m not 100% sure, but I believe that if you enter your Fidelity fund info into Vanguard’s website as an outside investment, Vanguard’s website will include it in it’s portfolio analysis, which calculates out various asset classes. So if you do decide to stick with Fidelity, that’s something you might want to look into.

    Also, if you decide to move funds over to Vanguard (Tom is making a good case up there…) make sure to ask that Fidelity have you pay that $50 transfer fee with “outside” (i.e. “taxable”) money, instead of deducting it from your IRA.

  4. April 18, 2008 1:14 pm

    Vanguard has a simpler allocation than fidelity. Feels are .2 vs .8 or so, might be worth moving. It just is such a hassle. I think I’ll at least wait until this transaction is complete so I don’t have all my money out of the market at once.

  5. April 18, 2008 1:16 pm

    Thanks Tom!

  6. April 18, 2008 1:47 pm

    I just did the same thing, with the three way call and everything. Pretty harmless process. For some reason this made me laugh:

    “Hi this is D from Fidelity, your on a recorded line, how can I help you?”
    “Hi D, this is B from Vanguard, you are also on a recorded line…”

    I wish everything could be done online, anytime. It would be so easy.

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