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Ford Retirement Plans To Pull $900 Million From Fidelity Contrafund
Not picking on M* or something. Contra fund is a growth-oriented fund and S&P 500 is not its benchmark. The second comparison to the large cap growth fund is okay though.
Contrafund's 7.71 percent total return is three times more than the S&P 500's 2.48 percent, according to Morningstar. Danoff is beating 73 percent of his large-cap growth fund peers.
The collective investment trusts they referred to is a similarly managed products only available to retirement accounts but at much lower expense ratio. Looks like something at Ford is doing the right thing for their employees.
Contra's prospectus uses the S&P 500 index as the benchmark with which to compare performance.
Perhaps more important, "the portion of [Danoff's] bonus that is linked to the investment performance of his fund is based on the fund's pre-tax investment performance measured against the benchmark index identified below for the fund ...
This is bad news for holders of contrafund in taxable accounts as it will probably lead to a significant increase in capital gain distributions. I suppose the best case is that Danoff becomes bullish in about a month and takes almost all of the $900million out of cash and short term bonds.
Just because an investment option is no longer available to employee to invest in why would the writer assume that those who presently hold Contrafund shares in their employee accounts would be liquidating them?
I get that I can no longer buy future shares of a great fund in my employee investment account, but it doesn't mean I will have to sell all my presently held shares.
The plan administrators will move the money to a designated fund for you unless you specify another option. I doubt a FORD employee will be able to keep FCNTX if the plan drops it from the lineup.
Wonder if this decision by the plan administrator provides the employee with a qualifying event to rollover these shares "in kind" to another IRA. Seems as if an employee should have other options besides, "sell and buy something else."
Would this plan change be classified as a termination (we no longer offer this option) as a:
Plan Termination
If your employer has decided to terminate the 401(k) plan and doesn't offer a new defined contribution plan in its place, you can roll over your assets into an IRA. For example, if your employer is getting rid of the 401(k) plan and switching to a defined benefits plan instead, such as a traditional pension plan, the event qualifies for a rollover to an IRA. You can't put your 401(k) assets into the pension plan since you can't contribute to it. However, if the employer is switching to a SIMPLE IRA plan instead, you can roll over your 401(k) assets, as those have a place in the new plan.
Also, 403b(7) account holders had an option called a 1035 exchange whereby assets could be moved from a fund family that was part of the plan sponsor's options to another institution of the employee's choice (that might not be part of the plan sponsor's list of options or even part of the plan).
I did this while still employed enabling me to obtain access to TRP funds which where not offered by my employee plan.
Wonder if an exchange is available for 401K plans similar to the 1035 exchange?
My experience has been the plan eliminates a fund and sends out notice to which fund the monies will be transferred to. I cannot leave/transfer my 401 until my employment terminates.
My experience has been the plan eliminates a fund and sends out notice to which fund the monies will be transferred to. I cannot leave/transfer my 401 until my employment terminates.
Changing jobs qualifies...I moved from one school district to another (different employers) over a summer break and as a result I had the ability to rollover my 403b(7) from the grips of the plan sponsors annuity sucking vampire squids directly to Vanguard where I had access to all of Vanguard's low fee funds and brokerage options.
My experience was the same as Art's. You can not roll over any part of a 401k if you are still with that same employer, plan options change or not. You are stuck with the options they offer and those options can and do change from time to time. My plan's options have changed numerous times over the years.
Comments
Regards,
Ted
Perhaps more important, "the portion of [Danoff's] bonus that is linked to the investment performance of his fund is based on the fund's pre-tax investment performance measured against the benchmark index identified below for the fund ...
"Fund: Fidelity Contrafund. Benchmark Index: S&P 500 Index"
This is from Contra's SAI.
I get that I can no longer buy future shares of a great fund in my employee investment account, but it doesn't mean I will have to sell all my presently held shares.
Am I missing something here?
Would this plan change be classified as a termination (we no longer offer this option) as a:
Plan Termination
If your employer has decided to terminate the 401(k) plan and doesn't offer a new defined contribution plan in its place, you can roll over your assets into an IRA. For example, if your employer is getting rid of the 401(k) plan and switching to a defined benefits plan instead, such as a traditional pension plan, the event qualifies for a rollover to an IRA. You can't put your 401(k) assets into the pension plan since you can't contribute to it. However, if the employer is switching to a SIMPLE IRA plan instead, you can roll over your 401(k) assets, as those have a place in the new plan.
from link:
qualifying-event-401k-asset-rollovers-ira
Also, 403b(7) account holders had an option called a 1035 exchange whereby assets could be moved from a fund family that was part of the plan sponsor's options to another institution of the employee's choice (that might not be part of the plan sponsor's list of options or even part of the plan).
I did this while still employed enabling me to obtain access to TRP funds which where not offered by my employee plan.
Wonder if an exchange is available for 401K plans similar to the 1035 exchange?