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.
But if a trade is disallowed until you speak to someone personally, that just tells me that the outfit has their heads up their asses, no? So, why would I want to use them at all? I can never tell if THEY know what they're doing. And they are the ones presuming to take my money and use it ?????
--- Municipal Bonds in an IRA (not a Fidelity written opinion below, but obviously shared by Fidelity)
***** One of the most critical considerations is to ensure you avoid placing municipal bonds (munis) in an IRA. The primary attraction of munis is that the interest on individual muni bonds and municipal bond funds is tax-exempt, which means that they also tend to offer lower pre-tax yields than taxable bonds. The key to strategically using an IRA is to use the tax advantages of the account on investments that otherwise don't provide an advantage. Since the interest and capital gains in an IRA are already tax-exempt, there isn’t any benefit to holding munis in the IRA. Instead, use a regular (non-IRA) account to hold munis and save the IRA for other investments that require a tax shelter. *****
>>> While there are time periods when one is able to have a decent profit from pricing in muni's, generally; taxable bonds are more appropriate in an IRA account. As @msf stated, a purchase for muni's may be made into an IRA, but not via the user online interface. Aside from a "disallowed" statement, Fidelity should add a full statement that such a trade is not beneficial into an IRA account; and to call if one really needs this purchase. I view this purchase restriction as a form of a fiduciary electronic tap on one's shoulder about such an investment in an IRA. Contact a financial advisor and ask the question: Should I hold muni bonds/funds in my IRA account?
You paint with a very broad brush of misunderstanding and distrust (that just tells me that the outfit has their heads up their asses, no? So, why would I want to use them at all? I can never tell if THEY know what they're doing.), based upon a small operational function within Fidelity.
Crash, you would be pleased, had you become a Fidelity account holder.
But if a trade is disallowed until you speak to someone personally, that just tells me that the outfit has their heads up their asses, no?
No. Brokerages have a responsibility to provide some protection against your shooting yourself in the foot. I'm confident that originates in part from the "Know Your Customer" rule; there's likely more to it than that.
Brokerages are not mere mechanical order takers despite what people may think, Fidelity and some other brokerages require you to sign a designated investments agreement before you can invest through them in some high risk investments. http://personal.fidelity.com/accounts/pdf/designated-agreement.pdf
Similarly, Fidelity takes action to ensure that when you place an order to purchase munis in an IRA, something that is generally inappropriate for most investors, it is going to make sure that you know what you're doing. You may not like the mechanism by which it is doing this (phone call rather than online form. But that's not the same thing as objecting to Fidelity doing checking at all.
I’ve never had a trade “disallowed” by any firm (unless it violated some 30-day block). But at TRP and anywhere else I’ve been at their website alerts you prior to trying to execute such a trade that it’s not allowable along with the reason.
Re munis - there have been rare occasions over the years where it actually made sense to own them in a tax sheltered account due to mispricing between taxable and non taxable securities. Doesn’t happen often, but it does occassionally occur, as I think @msf has inferred.
I’m confident TRP would (with due diligence) allow one to buy munis within a tax sheltered account - though I’ve never tried. Generally, TRP is very supportive of investors and easy to work with on those kinds of matters. It’s the “nuts-and-bolts” account servicing (things like changing a a preferred email or phone contact or how statements are delivered ) that seems to have become more error prone lately.
Here’s a typical example: Several years ago I needed to call them from a hotel while traveling. When the agent requested a “call back number” in case we got cut off, I gave him the number for the cheap prepaid tracfone I carried back than only when traveling. I was emphatic that this was a temporary phone number and not to be used for anything other than this one time need. A month or so later I noticed when logged in to my account that they had changed my phone number of record from what it had been for many years to that of the temporary tracpone number. Explicitly against my request. It’s things like that that drive me up a tree.
@catch22@msf@hank What hank says here makes great sense, and adds to the case I had made, above. "I’ve never had a trade “disallowed” by any firm (unless it violated some 30 day block rule). ISTM that if processing the trade online, the website would alert you prior to trying to execute such a trade that it’s not allowable for whatever reason."
Munis in a T-IRA makes no sense, generally speaking. Understood. What I failed to mention in my comments above is this: that any investor needs to do his/her own due diligence, before thinking about trading, buying, selling, investing of ANY sort. Investing is a complicated business. It has been made so, deliberately. Caveat Emptor. So, there's a fiduciary element to all of this. If a muni-purchase into an IRA is desired, and Fido won't let you do it, it seems to me, that hank's words fit perfectly. A fiduciary responsibility by definition, ISTM, entails a measure of COMMUNICATION.
Hank, yes; I noted about mis-pricing during some time periods for muni bonds vs taxable bonds. I considered several years ago an investment in NHMRX, but other sector investments were performing nicely and the transaction didn't happen. All of my accounts are either T or Roth IRA's, and the online buy (muni fund) wouldn't have been processed. Below, is the current message returned when attempting to buy a muni fund for a T or Roth IRA at Fidelity. All online buys require a "preview the trade" before being processed. As @msf noted, the message doesn't prevent the transaction in total, but not via electronic channels.
----- (010386) The security you are attempting to trade is a tax-free mutual fund. Retirement accounts are prevented from buying or exchanging into tax-free mutual funds through the electronic channels. For more information, contact a Fidelity representative at 800-544-6666. -----
@Crash. It is not stated in this thread that you can not have a muni investment in an IRA; but that you can not process the transaction electronically.
"..through the electronic channels..." Yes. A phrase which COMMUNICATES nothing.
Well, to this tail-end boomer, that easily reads as through their website, app or automated telephone service (which I can’t believe is still a thing). Basically, if you’re not talking to a human to make the trade, it’s not going to happen.
It makes perfectly good sense for Fidelity to require investors to speak to a representative if you try to buy muni bonds for an IRA account. In nearly all cases, such a trade would be disadvantageous for the investor. Fidelity is merely looking out for unwise investors by blocking such trades.
"..through the electronic channels..." Yes. A phrase which COMMUNICATES nothing.
Well, to this tail-end boomer, that easily reads as through their website, app or automated telephone service (which I can’t believe is still a thing). Basically, if you’re not talking to a human to make the trade, it’s not going to happen.
It makes perfectly good sense for Fidelity to require investors to speak to a representative if you try to buy muni bonds for an IRA account. In nearly all cases, such a trade would be disadvantageous for the investor. Fidelity is merely looking out for unwise investors by blocking such trades.
Of course it's a reference to their electronic trading service. Of course it's disadvantageous for the investor: munis into an IRA. My point is that the short snippet which includes the phrase, "electronic channels" does not tell the investor anything about the WHY here. It just says "you can't do it this way." (So the investor should guess and try a few different ways--- still uninformed about the WHY? Until he bumps into a Fidelity person who can explain WHY this is the case? I mean, perhaps some GENIUS over there could see to it that a very simple phrase could be included along with that phrase, "through the electronic channels." Only a very few more words would suffice: "This option in not permitted by Fidelity through its electronic channels. Municipal bonds are ordinarily disadvantageous in an IRA account. Please call us."
That's too bad about T. Rowe Price. Over the years I've found them extremely helpful, whether it was in setting up my individual 401(k) or with issues in managing it, or in navigating their closed fund rules, or with steps to distribute assets from an estate.
(OTOH, it took me six months to get a correction distribution out of a rollover IRA that came from a 401(k). There had been an excess contribution in the 401(k) that needed to be undone. No institution is perfect.)
As I recall, you have some D&C funds directly with the family. If you want to consolidate them at Fidelity, you may be able to do that without increasing your costs too much. D&C funds are transaction fee funds, but once you have positions in the funds at Fidelity (via transfer in kind), it may be possible to add more shares for a $5 fee and sell with no fees.
You first have to check whether Fidelity allows automatic investments for these funds. It does for most, but not all. To add to your position, you set up a series of automatic investments, then after the first one executes you cancel the rest. This gives you control and costs you $5/buy. Selling is done as usual, by placing a same-day sell order.
Whether it's worth the nominal fee and small lag time in making purchases (automated investments are not supposed to be set up as same-day purchases) is a matter of personal preference.
“D&C funds are transaction fee funds, but once you have positions in the funds at Fidelity (via transfer in kind), it may be possible to add more shares for a $5 fee and sell with no fees.”
- Just out of curiosity (being pretty much in the dark) when doing a TIK (transfer in kind) I assume there’s no charge? Or … is the charge waived only for NTIF funds?
- Re PRWCX … Since I have it now in a traditional IRA, may I assume (1) I can do a TIK to fidelity and (2) my ability to buy and sell shares will continue (as long as I don’t close the account) ? -
This will be a gradual process.
The recent issue involved their ignoring the Michigan W-4P (withholding opt-out form) which I have faithfully completed and mailed to them every January 1 for about a decade (ever since Michigan began mandatory withholding) along with a typewritten letter and list of funds affected.
For whatever reason, yesterday they withheld Michigan tax from one of the two distributions. My transaction was a pretty routine process. Simply exchanging from 2 IRA funds into a single non-retirement money market fund. There’s a check-off box to decline federal w/h - but not for state. According to their phone rep this morning having a W-4P on file is no longer adequate. The distribution request must also be presented to them in a phone call or by letter for the W-4P to be honored. “Why-Oh-Why just the one fund?” (I asked). Why was the second distribution not hit with the same withholding! Answer: “That was a one-time occurrence” (ie: an accident).
At this point I’m holding my breath hoping they don’t go back and pull tax out of the unafflicted fund.
Transfers in kind are always free on the receiving end - at least I've never seen anyone list a charge. Charges on the sending side are another matter.
Fund families don't charge fees to transfer out in kind, again AFAIK. Some brokerages do charge - they may have one fee for a partial transfer (i.e. less than all your holdings), another fee for a full transfer, or both or neither. Fidelity charges no outgoing fees. Schwab charges $25 for partial in kind, $50 for a full transfer. https://www.fidelity.com/why-fidelity/pricing-fees (includes Schwab pricing comparison)
hank Congratulations on the move to Fidelity! Yes you will be able to transfer PRWCX as a transfer-in-kind. ACAT transfers are completed within 4 to 7 business days. If you have any questions on Fidelity funds, fire away. Also, their mutual fund screener is handy, as you can sort by many parameters, including Sharpe ratio and standard deviation !
I did one “in-kind” today (TMSRX). The others today were of the short-term bond variety. Just liquidated them and will see what Fidelity’s funds look like. IRAs necessitated signing and mailing paperwork (which they prepared). The non-retirement money seemed to go through online.
+1 I've been using ACSNX PRWBX EALDX and VUSB in this area,with slight allocations to TRBUX and BBBMX as these funds each lost more than 150 basis points in 1Q 2020.
Hank. Curious........was the "in-kind" for TMSRX a phone rep. transaction or an electronic transaction via the Fidelity site? Thank you.
Electronic up to that point (but did have to sign and mail in what they prepared for me online). After entering a fund code for transfer, a pop-up window gave the choice of either liquidate or transfer in kind. I was surprised it was that easy.
BTW @Catch22 / Have you had any issues with the Michigan withholding opt-out? Curious how you and your fiduciaries handle that. I don't think it was intended to be resubmitted year after year. Once should be enough. But with Price as a precaution I've been practically "hand delivering" a new copy every year just to be safe. State already over withholds due to withholding on my pension.
Hank. When I had to take the RMD from my IRA in 2019, I set the percentage of Fed. taxes to withhold and did not have any Michigan taxes withheld. I do not recall a statement stating a mandatory withholding for Michigan. No letters or other signed documents to Fidelity about this area. When performing an electronic transfer from the IRA to a C.U. account, a series of brief questions and fill in the blanks is needed. This is where the tax withholding percentages are noted, being set to whatever percentage one desires or ZERO. There was confusion in this area after the legislation for changing the pension(s) taxation of seniors in Michigan, by age grouping, was finalized in early 2012 (MI Supreme Court ruling).
I presume you may have already setup your financial institution account link for money into Fidelity or from Fidelity. Related to this, is that the normal travel time is 2 or 3 days; and of course, no fees.
Don't forget to set your beneficiary section and don't hesitate with any questions, either here; or via private message.
@hank, I believe TMSRX is a TF fund at Fidelity. Even so you can do "automatic investment" at specific amount and date for purchase, $5 fee. No fee for selling TF funds. Other TRF funds are on no-transaction fee platform. Each brokerage is different on who is or not on NTF platform.
In kind transfer is always free at Fidelity and everything can be done online.
These days I am using more ETFs just to keep thing simpler.
@hank : "State already over withholds due to withholding on my pension." I would think you have the final say on how much to with_hold from your pension or is it a limited to a set amount ? Derf
Afraid I do have questions about how Fido’s cash brokerage works. Here’s my current understanding:
- Direct fund-to fund-exchange are not possible.
- Moving money from RPGAX to PRSIX would involve first transferring from RPGAX into their cash management account and than reinvesting it into PRSIX.
- The circuitous route above would probably take about 3 days to complete.
- Fido has no minimum balance in the brokerage cash account. Maintaining a 0 balance is allowable.
If I close TRP’s money market fund I’ll need a separate fund for running the annual budget that’s not tied in any way to the investing function. In essence, I use Price’s money market fund as a big “piggy bank”. A set amount is “tossed in” every month (from my local bank account) and than spent as budgeted expenses dictate. No record keeping necessary since in the end it’s all the same.
Am pondering what to use at Fido or elsewhere solely for that function? Must be able to move money to / from the local bank using EFT transfers without cost or restrictions - although a minimum balance is perfectly acceptable. Thanks for any suggestions.
That depends on the state. Michigan, along with 16 other states and the District of Columbia has mandatory withholding on taxable pension and annuity payments.
@hank, I believe TMSRX is a TF fund at Fidelity. Even so you can do "automatic investment" at specific amount and date for purchase, $5 fee. No fee for selling TF funds. Other TRF funds are on no-transaction fee platform. Each brokerage is different on who is or not on NTF platform.
Earlier this year, I purchased TMSRX at Fido with a TF. But after checking on it recently, I see that it is now offered NTF at Fido. Good news for a change!
Afraid I do have questions about how Fido’s cash brokerage works. Here’s my current understanding:
- Moving money from RPGAX to PRSIX would involve first transferring from RPGAX into their cash management account and than reinvesting it into PRSIX.
- The circuitous route above would probably take about 3 days to complete.
You can easily skip using the cash management account as an intermediary as follows
1. Create a sell order for RPGAX. 2. Under Action select "Sell and use proceeds to buy another (Dollars)" 3. Enter the dollar amount of PRSIX you want to buy along with its symbol. 4. Preview and submit your order.
RPGAX will be sold at its closing price on the day you submit your order and PRSIX will be purchased at its closing price the next day.
Afraid I do have questions about how Fido’s cash brokerage works. Here’s my current understanding:
- Moving money from RPGAX to PRSIX would involve first transferring from RPGAX into their cash management account and than reinvesting it into PRSIX.
- The circuitous route above would probably take about 3 days to complete.
You can easily skip using the cash management account as an intermediary as follows
1. Create a sell order for RPGAX. 2. Under Action select "Sell and use proceeds to buy another (Dollars)" 3. Enter the dollar amount of PRSIX you want to buy along with its symbol. 4. Preview and submit your order.
RPGAX will be sold at its closing price on the day you submit your order and PRSIX will be purchased at its closing price the next day.
+1 You’re being archived.- So, Fido’s cash account should work for the budgetary function. Thanks.
Intra-family exchanges are typically executed same day, as if you were doing an exchange directly through the distributor:
Warning: This exchange will be completed at the next available price. You may be subject to additional fund-imposed fees when you sell this fund, including short-term redemption fees. Please consult the fund's prospectus for the most current information.
Inter-family exchanges work the as described:
Warning: This is not an exchange. This trade will take two business days to execute.
Warning: This Sell will be completed at the next available price. This transaction may be subject to additional fund-imposed fees, including short-term redemption fees. Please consult the fund's prospectus for additional information.
Hi hank, Below are the choices (Fidelity) when one has a RMD from a traditional IRA. We'll have to do the RMD's again for 2021. This process starts with selecting the "transfer" icon that steps you easily through selecting your traditional IRA account, how much money, which bank or c.u. account to move the monies and tax withholding choices. Note: the RMD money will come from your "core cash account", so if one's RMD is $5,000; you'll have to have this amount in your cash account prior to the transfer. In my case for the 2021 RMD, I currently have $104 in cash; so, at some point before April of 2022, I'll have to sell something, which will automatically go to the cash account to accommodate the required RMD amount. ALSO, Fidelity will provide to you, the RMD calculation for your IRA account with them, based upon the value of your IRA account.
Choose your federal tax withholding The IRS requires Fidelity to use 10% as the default rate for federal taxes.
Federal tax rate, 10% (default)
You can choose to increase this rate or opt out by selecting '0%'. If you opt out, you may need to pay these taxes when you file your tax returns.
Choose your state tax withholding Based on MI rules, the default state tax rate is 4.25%.
State tax rate
4.25% (default) You have the option to change this to a higher percentage or opt out.
In case people read quickly and see a conflict between my post and catch's regarding mandatory withholding, note that the rules are different for different types of accounts. Withholding rules on IRA distributions tend to be more flexible than withholding rules on pension and 401(k) distributions.
Also, though Fidelity (and many institutions) will calculate your RMD automatically, still check it yourself. Even Fidelity can get it wrong, as it did one year on my Roth RMD. Fidelity put in an amount that was about 4x the correct amount - easy to catch.
If you have an inherited IRA, pay particular attention to the RMD calculation in 2022. The tables are changing, and the change for these RMDs is not as simple as looking up the updated life expectancy in the new tables. One has to look up the updated life expectancy for your age when the RMDs started, then subtract the number of years from then until to 2022. That's the updated divisor to use for the RMD calculation. It's not all that complicated, but it opens the possibility of miscalculation.
Comments
You noted:
--- Municipal Bonds in an IRA (not a Fidelity written opinion below, but obviously shared by Fidelity)
***** One of the most critical considerations is to ensure you avoid placing municipal bonds (munis) in an IRA. The primary attraction of munis is that the interest on individual muni bonds and municipal bond funds is tax-exempt, which means that they also tend to offer lower pre-tax yields than taxable bonds.
The key to strategically using an IRA is to use the tax advantages of the account on investments that otherwise don't provide an advantage.
Since the interest and capital gains in an IRA are already tax-exempt, there isn’t any benefit to holding munis in the IRA. Instead, use a regular (non-IRA) account to hold munis and save the IRA for other investments that require a tax shelter. *****
>>> While there are time periods when one is able to have a decent profit from pricing in muni's, generally; taxable bonds are more appropriate in an IRA account. As @msf stated, a purchase for muni's may be made into an IRA, but not via the user online interface. Aside from a "disallowed" statement, Fidelity should add a full statement that such a trade is not beneficial into an IRA account; and to call if one really needs this purchase.
I view this purchase restriction as a form of a fiduciary electronic tap on one's shoulder about such an investment in an IRA.
Contact a financial advisor and ask the question: Should I hold muni bonds/funds in my IRA account?
You paint with a very broad brush of misunderstanding and distrust (that just tells me that the outfit has their heads up their asses, no? So, why would I want to use them at all? I can never tell if THEY know what they're doing.), based upon a small operational function within Fidelity.
Crash, you would be pleased, had you become a Fidelity account holder.
No. Brokerages have a responsibility to provide some protection against your shooting yourself in the foot. I'm confident that originates in part from the "Know Your Customer" rule; there's likely more to it than that.
Brokerages are not mere mechanical order takers despite what people may think, Fidelity and some other brokerages require you to sign a designated investments agreement before you can invest through them in some high risk investments.
http://personal.fidelity.com/accounts/pdf/designated-agreement.pdf
Similarly, Fidelity takes action to ensure that when you place an order to purchase munis in an IRA, something that is generally inappropriate for most investors, it is going to make sure that you know what you're doing. You may not like the mechanism by which it is doing this (phone call rather than online form. But that's not the same thing as objecting to Fidelity doing checking at all.
CNBC, 2018, Fidelity is trying to save investors from blowing up their accounts in another wacky fund
https://www.cnbc.com/2018/02/09/fidelity-is-trying-to-save-investors-from-blowing-up-their-accounts.html
Re munis - there have been rare occasions over the years where it actually made sense to own them in a tax sheltered account due to mispricing between taxable and non taxable securities. Doesn’t happen often, but it does occassionally occur, as I think @msf has inferred.
I’m confident TRP would (with due diligence) allow one to buy munis within a tax sheltered account - though I’ve never tried. Generally, TRP is very supportive of investors and easy to work with on those kinds of matters. It’s the “nuts-and-bolts” account servicing (things like changing a a preferred email or phone contact or how statements are delivered ) that seems to have become more error prone lately.
Here’s a typical example: Several years ago I needed to call them from a hotel while traveling. When the agent requested a “call back number” in case we got cut off, I gave him the number for the cheap prepaid tracfone I carried back than only when traveling. I was emphatic that this was a temporary phone number and not to be used for anything other than this one time need. A month or so later I noticed when logged in to my account that they had changed my phone number of record from what it had been for many years to that of the temporary tracpone number. Explicitly against my request. It’s things like that that drive me up a tree.
What hank says here makes great sense, and adds to the case I had made, above.
"I’ve never had a trade “disallowed” by any firm (unless it violated some 30 day block rule). ISTM that if processing the trade online, the website would alert you prior to trying to execute such a trade that it’s not allowable for whatever reason."
Munis in a T-IRA makes no sense, generally speaking. Understood. What I failed to mention in my comments above is this: that any investor needs to do his/her own due diligence, before thinking about trading, buying, selling, investing of ANY sort. Investing is a complicated business. It has been made so, deliberately. Caveat Emptor. So, there's a fiduciary element to all of this. If a muni-purchase into an IRA is desired, and Fido won't let you do it, it seems to me, that hank's words fit perfectly. A fiduciary responsibility by definition, ISTM, entails a measure of COMMUNICATION.
Below, is the current message returned when attempting to buy a muni fund for a T or Roth IRA at Fidelity. All online buys require a "preview the trade" before being processed. As @msf noted, the message doesn't prevent the transaction in total, but not via electronic channels.
----- (010386) The security you are attempting to trade is a tax-free mutual fund. Retirement accounts are prevented from buying or exchanging into tax-free mutual funds through the electronic channels. For more information, contact a Fidelity representative at 800-544-6666. -----
@Crash. It is not stated in this thread that you can not have a muni investment in an IRA; but that you can not process the transaction electronically.
That's too bad about T. Rowe Price. Over the years I've found them extremely helpful, whether it was in setting up my individual 401(k) or with issues in managing it, or in navigating their closed fund rules, or with steps to distribute assets from an estate.
(OTOH, it took me six months to get a correction distribution out of a rollover IRA that came from a 401(k). There had been an excess contribution in the 401(k) that needed to be undone. No institution is perfect.)
As I recall, you have some D&C funds directly with the family. If you want to consolidate them at Fidelity, you may be able to do that without increasing your costs too much. D&C funds are transaction fee funds, but once you have positions in the funds at Fidelity (via transfer in kind), it may be possible to add more shares for a $5 fee and sell with no fees.
You first have to check whether Fidelity allows automatic investments for these funds. It does for most, but not all. To add to your position, you set up a series of automatic investments, then after the first one executes you cancel the rest. This gives you control and costs you $5/buy. Selling is done as usual, by placing a same-day sell order.
Whether it's worth the nominal fee and small lag time in making purchases (automated investments are not supposed to be set up as same-day purchases) is a matter of personal preference.
“D&C funds are transaction fee funds, but once you have positions in the funds at Fidelity (via transfer in kind), it may be possible to add more shares for a $5 fee and sell with no fees.”
- Just out of curiosity (being pretty much in the dark) when doing a TIK (transfer in kind) I assume there’s no charge? Or … is the charge waived only for NTIF funds?
- Re PRWCX … Since I have it now in a traditional IRA, may I assume (1) I can do a TIK to fidelity and (2) my ability to buy and sell shares will continue (as long as I don’t close the account) ?
-
This will be a gradual process.
The recent issue involved their ignoring the Michigan W-4P (withholding opt-out form) which I have faithfully completed and mailed to them every January 1 for about a decade (ever since Michigan began mandatory withholding) along with a typewritten letter and list of funds affected.
For whatever reason, yesterday they withheld Michigan tax from one of the two distributions. My transaction was a pretty routine process. Simply exchanging from 2 IRA funds into a single non-retirement money market fund. There’s a check-off box to decline federal w/h - but not for state. According to their phone rep this morning having a W-4P on file is no longer adequate. The distribution request must also be presented to them in a phone call or by letter for the W-4P to be honored. “Why-Oh-Why just the one fund?” (I asked). Why was the second distribution not hit with the same withholding! Answer: “That was a one-time occurrence” (ie: an accident).
At this point I’m holding my breath hoping they don’t go back and pull tax out of the unafflicted fund.
Ahhh …
Fund families don't charge fees to transfer out in kind, again AFAIK. Some brokerages do charge - they may have one fee for a partial transfer (i.e. less than all your holdings), another fee for a full transfer, or both or neither. Fidelity charges no outgoing fees. Schwab charges $25 for partial in kind, $50 for a full transfer.
https://www.fidelity.com/why-fidelity/pricing-fees (includes Schwab pricing comparison)
That still beats WellsTrade by a mile - it charges $95. Here's a page giving in-kind (ACAT) transfer fees from various brokerages:
https://topratedfirms.com/brokers/fees/brokerage-account-transfer-fees.aspx
I did one “in-kind” today (TMSRX). The others today were of the short-term bond variety. Just liquidated them and will see what Fidelity’s funds look like. IRAs necessitated signing and mailing paperwork (which they prepared). The non-retirement money seemed to go through online.
All made easier by the good folks here at mfo …
BTW @Catch22 / Have you had any issues with the Michigan withholding opt-out? Curious how you and your fiduciaries handle that. I don't think it was intended to be resubmitted year after year. Once should be enough. But with Price as a precaution I've been practically "hand delivering" a new copy every year just to be safe. State already over withholds due to withholding on my pension.
No letters or other signed documents to Fidelity about this area.
When performing an electronic transfer from the IRA to a C.U. account, a series of brief questions and fill in the blanks is needed. This is where the tax withholding percentages are noted, being set to whatever percentage one desires or ZERO.
There was confusion in this area after the legislation for changing the pension(s) taxation of seniors in Michigan, by age grouping, was finalized in early 2012 (MI Supreme Court ruling).
I presume you may have already setup your financial institution account link for money into Fidelity or from Fidelity. Related to this, is that the normal travel time is 2 or 3 days; and of course, no fees.
Don't forget to set your beneficiary section and don't hesitate with any questions, either here; or via private message.
Take care,
Catch
In kind transfer is always free at Fidelity and everything can be done online.
These days I am using more ETFs just to keep thing simpler.
I would think you have the final say on how much to with_hold from your pension or is it a limited to a set amount ?
Derf
- Direct fund-to fund-exchange are not possible.
- Moving money from RPGAX to PRSIX would involve first transferring from RPGAX into their cash management account and than reinvesting it into PRSIX.
- The circuitous route above would probably take about 3 days to complete.
- Fido has no minimum balance in the brokerage cash account. Maintaining a 0 balance is allowable.
If I close TRP’s money market fund I’ll need a separate fund for running the annual budget that’s not tied in any way to the investing function. In essence, I use Price’s money market fund as a big “piggy bank”. A set amount is “tossed in” every month (from my local bank account) and than spent as budgeted expenses dictate. No record keeping necessary since in the end it’s all the same.
Am pondering what to use at Fido or elsewhere solely for that function? Must be able to move money to / from the local bank using EFT transfers without cost or restrictions - although a minimum balance is perfectly acceptable. Thanks for any suggestions.
https://www.tiaa.org/public/pdf/tax_withholding_rules.pdf
1. Create a sell order for RPGAX.
2. Under Action select "Sell and use proceeds to buy another (Dollars)"
3. Enter the dollar amount of PRSIX you want to buy along with its symbol.
4. Preview and submit your order.
RPGAX will be sold at its closing price on the day you submit your order and PRSIX will be purchased at its closing price the next day.
Below are the choices (Fidelity) when one has a RMD from a traditional IRA. We'll have to do the RMD's again for 2021.
This process starts with selecting the "transfer" icon that steps you easily through selecting your traditional IRA account, how much money, which bank or c.u. account to move the monies and tax withholding choices.
Note: the RMD money will come from your "core cash account", so if one's RMD is $5,000; you'll have to have this amount in your cash account prior to the transfer. In my case for the 2021 RMD, I currently have $104 in cash; so, at some point before April of 2022, I'll have to sell something, which will automatically go to the cash account to accommodate the required RMD amount. ALSO, Fidelity will provide to you, the RMD calculation for your IRA account with them, based upon the value of your IRA account.
Also, though Fidelity (and many institutions) will calculate your RMD automatically, still check it yourself. Even Fidelity can get it wrong, as it did one year on my Roth RMD. Fidelity put in an amount that was about 4x the correct amount - easy to catch.
If you have an inherited IRA, pay particular attention to the RMD calculation in 2022. The tables are changing, and the change for these RMDs is not as simple as looking up the updated life expectancy in the new tables. One has to look up the updated life expectancy for your age when the RMDs started, then subtract the number of years from then until to 2022. That's the updated divisor to use for the RMD calculation. It's not all that complicated, but it opens the possibility of miscalculation.