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Recommendations for new fund house?



  • edited May 2021
    Reading @Catch22’s post above …

    I assume the owner of the account (you or I) makes the final decision as to when to take the RMD (in compliance with the governing law). Fido may indeed calculate an amount and send reminders.

    Actually, my read of the law is that RMDs do not have to come evenly from various fiduciaries. You are allowed to pick and choose where to take it. I’ve no problem taking distributions from their cash account when / if I decide to do it. Now only 25-30% in Traditional IRAs. Pull more out most years than the calculation calls for. Prefer to pay taxes on distributions now and let the Roth grow as a % of invested assets.

    Took my RMD early this year for rather complex reasons related to rebalancing. Essentially, through a “merry-go-round”, the proceeds ended up in PRHYX as part of my portfolio’s bond component. (But it’s complicated.)

    One further note: We’ve discussed Michigan’s mandatory withholding here before (the “pension tax” as it’s called). ISTM Catch did once report having filed the Michigan W 4-P with one or more of his custodians years ago. And, likely it remains in effect until he changes it. (Obviously, my recollection might be wrong). I’ve always thought TRP was being overly restrictive on that issue.

    I’ve read before (but don’t have time to research it) that the state even withholds tax from Roth distributions w/o the W 4P being on file. Completely illogical. Of course you’d get the money back at tax time.
  • Agree with @msf. One needs to verify any form of pension related taxation codes for your filing state. I also agree with verifying RMD calculations.
    --- Michigan pension taxation recent background:
    In 2011, MI Gov. Snyder (R) and company had a grand plan of removing a portion of the MI single business tax; with the theory of more business growth. However, this lost tax revenue had to be recovered from somewhere. A perverted pension taxation plan was hatched for a change of the rules for a segregated portion of the population. So, they went after the "gravy train" of taxable monies; being those born between 1946 and 1952, and their pension monies. Tis indeed, a mathematically precise target and makes absolute sense in terms of tax revenue generation. The full MI legislative vote had to be settled by a tie breaking vote. The legality of this targeted group taxation was challenged and "voted" as legal by the MI Supreme Court, (R) controlled at the time. The original tax policy is being revisited at this time, for possible revisions.
    --- Note: Keep in mind, that among all states; the folks born between 1946 and 1952 comprised a very large portion of those who have company pensions in Michigan, as a result of the formation of unions related to the large auto industry presence in Michigan. Pension plans moved to many other sectors in Michigan, in order for companies to compete for employees.
    --- Relative to the original questions/statements for MI pension taxation is that there is a formula (MI schedule 1) to establish the amount of pension(s), single or joint filing that is/are exempt from MI taxation.

    2019 Michigan Pension taxation
  • edited May 2021
    Snyder gets a lot of flack - mostly deserved. A slight ray of sunshine - he came from an accounting background and did thru various means leave the state pension system more actuarially sound than before.

    My beef with Price wasn’t the state tax. I’ll pay what’s legally legally due. But a fiduciary has a duty to communicate their intentions clearly and be consistent in their implementation - all the while abiding by the provisions of the law. And they should do so without creating unnecessary impediments.
  • hank You can also use Fidelity's Cash Management Account which is separate from the brokerage cash account. Transfers between the two are recorded nearly instantly. Both accounts come with a debit card that allows free ATM withdrawals in the US.
  • msf
    edited May 2021
    There's "free" and then there's "free, free, free".

    Fidelity charges no fee to make domestic withdrawals from either account. Reimbursements of 3rd party ATM fees (if not a CMA account) are another story:
    ​For Fidelity Cash Management Account owners, Youth Account owners or Fidelity Account® owners coded Premium, Active Trader VIP, Private Client Group, Wealth Management, or former Youth Account owners, your account will automatically be reimbursed for all ATM fees charged by other institutions while using the Fidelity® Debit Card at any ATM displaying the Visa®, Plus® or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited. Please note, for foreign transactions, there may be a 1% fee included in the amount charged to your account. ​

    With respect to the foreign transaction fee, the key word is "may". I've only made one side-by-side test against the Schwab card internationally. At least on that test no fee was included on the Fidelity card. The verbiage on debit purchases is different. On purchases made in a foreign country, there will be a 1% fee charged. Or so I've been told. I only use rebate credit cards for purchases.

    I use a CMA account for a single purpose - to have an ATM card that cannot access my money at Fidelity, save for a few hundred dollars I keep in the CMA account for pocket change.
  • edited May 2021
    MrRuffles said:

    You can easily skip using the cash management account as an intermediary as follows

    1. Create a sell order for (fund A).
    2. Under Action select "Sell and use proceeds to buy another (Dollars)"
    3. Enter the dollar amount of (fund B) you want to buy along with its symbol.
    4. Preview and submit your order.

    I’m wondering if the above approach would work in going between a mutual fund and an ETF? Reason for asking is they have a very short duration ETF (FLDR) with a low .15 ER that would work as “enhanced” cash within my portfolio. To be effective it would need to be able to interact with riskier funds - either accepting proceeded from sales or funding purchases. (Fido’s quite limited in its income based mutual fund offerings.)

    Also dug this up on Fido’s site …

    “ETFs and stocks do not carry sales charges, but you will be charged a commission each time you execute a trade online (unless the ETF is part of a commission-free online trading program).”

    Not sure what to make of those “commissions” and how much the cost might be on a given dollar denominated buy or sell.
  • You're looking at an old page (e.g. it talks about 3 business day settlements). These days, most brokerages including Fidelity charge nothing for online stock and ETF trades.

    Speaking of settlement times, you won't be able to "exchange" an ETF for a mutual fund because ETFs settle in two days, while most mutual funds settle in one day.

    If you're looking at ETFs, there's no particular reason to invest in Fidelity ETFs. All ETFs trade the same way - you're purchasing shares on the open market. Here's a good list of short duration ETFs to start with:

    And Fidelity's ETF comparison page, pre-loaded with five of these funds.

    FLDR would not be on my list of candidates. Too new, low volume (others have at least 20x as much trading - better for smaller spreads), and it's lost 0.44% YTD, while the others have made money.

  • edited May 2021
    Thanks @msf. I’ll figure out some kind of work-around. Whatever else, must protect cash position from the 60-day STT fee. Maintaining the cash allocation in their cash management account would work, as they exempt money markets from that fee. BTW - Is there a ticker symbol for the cash fund at Fido (where my liquidated assets from TRP should land)?

    The .44 YTD loss would be least of my worries. Essentially, it attempts to track an index. Might be that it’s avoiding the overvalued TIPS market.

    On another note, I hadn’t realized that a TIK “insulates” your fund’s value during the process so that the holding neither gains nor looses value. Dug that up this morning. Casts a different light on everything.

    Do you know whether the 60 day short term trading fee would apply to funds that are “transferred in kind” - or might those be exempt from the fee because they wasn’t purchased NTF at Fidelity?
  • edited May 2021
    EDIT: Called Fido with questions this morning.

    *** It seems I’ve been incorrect about the $49.95 “short term trading fee”. From a rep - Anything purchased NTF is not subject to a short term trading fee. Only those funds bought from outside fidelity that were not NTF would incur the fee. Huh?. That doesn’t seem to comply with what I’ve read.

    Anybody know for sure? / experience?

    - The rep emphasized their excessive trading policy. As I understand it they’re mainly concerned with trades over $10,000. If I understand correctly, selling a fund inside of 30 days triggers their “excessive” policy. (But it doesn’t sound like they block the transaction). Warnings / suspensions of trading / etc.)

    - As to an earlier question I had, when assessing short term trading fees they use “first in / first out” which means you can sell older shares you may have held longer without penalty.

    - As to a question I posed in the above response to msf, I was told no penalty would be assessed for selling a fund that came in “Transfer in kind”. One exception: If they knew from the outgoing custodian that the fund had been purchased within 30 days, than there would be an issue.

  • edited May 2021
    Hi hank, A quick blip about this question.
    BTW - Is there a ticker symbol for the cash fund at Fido (where my liquidated assets from TRP should land)?
    >>> One of the two tickers below are the likely cash/money market funds connected with your Traditional IRA account; and perhaps a brokerage account cash core position, if you added this option during your account setup.

    Government and U.S. Treasury Money Market

    --- Fidelity® Government Money Market Fund (SPAXX)

    --- Fidelity® Government Cash Reserves (FDRXX)

    I use a laptop to access FIDO, but I presume the screen layout is the same using an Ipad.

    --- login
    The page should open having the "summary" tab auto selected/default
    --- select the "positions" tab....just to the right of "summary" tab
    This should show a list of your accounts and the holdings within each (a lot of other data, too), including the ticker symbols, as well as the cash/money market tickers.
    EX: my account positions tab first lists my brokerage acct., then my T-IRA and lastly, the Roth IRA.

    Note: the cash/money market funds are directly connected to your T-IRA account and not hanging out in some other separate area of your account, as is my understanding of "sweep" accounts with some vendors. Your cash/money market position is where your "sells" money travel to, and where your "buys" money comes from. You do not have to perform a separate function "looking" for your cash account.
  • msf
    edited May 2021
    hank said:

    Whatever else, must protect cash position from the 60-day STT fee. Maintaining the cash allocation in their cash management account would work, as they exempt money markets from that fee. BTW - Is there a ticker symbol for the cash fund at Fido (where my liquidated assets from TRP should land)?

    The .44 YTD loss would be least of my worries. Essentially, it attempts to track an index. Might be that it’s avoiding the overvalued TIPS market.

    If your concern is to be able to withdraw cash quickly, be aware that ETFs have two-day settlement periods, during which time the cash value must stay in the account. (A margin account could float the money for a day if that's really critical.)

    Cash in your core account or in another Fidelity MMF is available for withdrawal "immediately" (don't recall whether that's literal or end of day since even MMF shares must be sold). Cash pulled from an internet bank is usually available within a day, though you're advised it could take longer.

    I mention internet banks again because the shorter the trigger, the more important low volatility/preservation of capital becomes.

    "Track an index" IMHO doesn't say much without examining the index. This index is untested, dynamic, and proprietary. Its objective is to improve "both returns and risk ... relative to traditional U.S. IG floating rate note indices." It invests in a mix of "U.S. corporate floating rate notes with less than 5 years maturity and U.S. Treasury Notes with 7 to 10 years maturity." From its statutory prospectus. It's not avoiding TIPS because they're overvalued but because it can't invest in them.

    It's hard to find a reason to prefer FLDR to JPST. The latter has lower volatility (std dev 0.80 vs. 1.13 over the past year) resulting in better Sharpe ratio (2.54 vs. 1.61 over past year), smaller bid/ask spread (0.02% vs 0.06% median over past 30 days), longer history, similar ER (0.18% vs 0.15%). The smoother curve in the graph below is JPST.

    You can invest in MMFs in any Fidelity brokerage account, it doesn't have to be the CMA account. The only advantage I can find to the CMA account is that it provides unlimited US ATM rebates on its debit card. AFAIK, all its other features are available in any brokerage account.

    EDIT:CMA accounts use a bank sweep as their core account. This is not available in other some other brokerage accounts.

    The "ticker" for Fidelity Cash is FCASH. It is kept as a general obligation of Fidelity; in essence you are lending the cash to Fidelity, which can use it for general business purposes. It is one of three choices you have for your "core" (transaction/checking) account inside a taxable brokerage account. Catch gave the tickers for the other options.
    hank said:

    On another note, I hadn’t realized that a TIK “insulates” your fund’s value during the process so that the holding neither gains nor looses value. Dug that up this morning. Casts a different light on everything.

    You can think of "transfer in kind" as picking up the fund shares (electronically) at one institution and transporting them to the other. So you can gain or lose value in transit, since you always retain "real" ownership of your shares.
  • edited May 2021
    Thanks Catch & msf - very helpful. Need to do my homework and read up on a lot of this stuff.

    (Edit / delete)
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