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Fido Adviser Doesn't Think I Should Do Roth Conversions/ (huh?)
03-01-2012, 02:42 PM
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#1
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Recycles dryer sheets
Join Date: Mar 2008
Posts: 53
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Fido Adviser Doesn't Think I Should Do Roth Conversions/ (huh?)
In trying to figure out what to do with my $385k FIDO 401K, I met with one of their reps today about possibly moving the 401K to an IRA. There are many good reasons to do this, but my primary one was to take advantage of the next few years when I'll be living off savings and have no income other than a few thousand in dividends. It seemed like the perfect opportunity to do some ROTH conversions with little to no taxes due.
I was shocked that the adviser didn't think it was worth my time to convert. She also seemed to think I'm too focused on the "little" things like expense ratios and keeping taxes low. I said I wanted to do a spreadsheet to compare the expense ratios of the available 401k funds vs. IRA funds and she gave me a look like I was out of my ever lovin' mind.
Please tell me I'm not crazy! (Or if I am, I guess I should know that, too).
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03-01-2012, 02:57 PM
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#2
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Recycles dryer sheets
Join Date: Sep 2011
Location: PWC VA
Posts: 144
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She saw a potential loss of business. I like Fidelity and still own a few of their funds, but your rant was exactly why I moved everything to Vanguard. Their very helpful when you move money to them, but less so when you might be doing something different with it.
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03-01-2012, 03:03 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by l2ridehd
Their very helpful when you move money to them, but less so when you might be doing something different with it.
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So, Fido is just like Vanguard? Who would have thunk that?
How would they lose money if you move from Fido 401K to Fido IRA? I am assuming you are retired from your company?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
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03-01-2012, 03:07 PM
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#4
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,710
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Quote:
Originally Posted by Zantastic
In trying to figure out what to do with my $385k FIDO 401K, I met with one of their reps today about possibly moving the 401K to an IRA. There are many good reasons to do this, but my primary one was to take advantage of the next few years when I'll be living off savings and have no income other than a few thousand in dividends. It seemed like the perfect opportunity to do some ROTH conversions with little to no taxes due.
I was shocked that the adviser didn't think it was worth my time to convert. She also seemed to think I'm too focused on the "little" things like expense ratios and keeping taxes low. I said I wanted to do a spreadsheet to compare the expense ratios of the available 401k funds vs. IRA funds and she gave me a look like I was out of my ever lovin' mind.
Please tell me I'm not crazy! (Or if I am, I guess I should know that, too).
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You are sane and should take advantage of every opportunity to convert to ROTH. Favorable taxes are a good enough reason but you also get no more RMD. Don't mind the Fidelity rep.
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03-01-2012, 03:37 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,303
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You're not crazy at all to want to rollover your 401k $ to an IRA. More often than not it's the smart move. I've never seen a case where a 401k was a better option, it's possible but very, very rare. That Fidelity rep probably just shot her own foot off...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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03-01-2012, 04:08 PM
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#6
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Recycles dryer sheets
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
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We have accounts with both Fidelity and Vanguard and found Fidelity more accommodating with respect to 401K to IRA to ROTH conversions.
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03-01-2012, 04:14 PM
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#7
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 82
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If you do a Roth conversion then you have less raw $$$ in their funds....
I absolutely agree with converting when you are at 0% Fed Tax rate, and potentially even at ~10-15% depending on other factors.
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03-01-2012, 04:15 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,239
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Quote:
Originally Posted by Midpack
You're not crazy at all to want to rollover your 401k $ to an IRA. More often than not it's the smart move. I've never seen a case where a 401k was a better option, it's possible but very, very rare. That Fidelity rep probably just shot her own foot off...
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There is one case where the 401(k) is better than an IRA... if you have company stock that has appreciated a lot...
You can take the stock out of the 401(k) at COST, not what it is valued today...
I am waiting until I am retired and my income is low to do it for my investment in mega.... however, it has basically been flat for 10 years so in a way it probably would have been better for me to move it awhile back and invest it somewhere else....
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03-01-2012, 05:14 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 1,012
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Quote:
Originally Posted by Midpack
You're not crazy at all to want to rollover your 401k $ to an IRA. More often than not it's the smart move. I've never seen a case where a 401k was a better option, it's possible but very, very rare. That Fidelity rep probably just shot her own foot off...
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i can think of 2 (not counting the 1 already given): 1) if you retire at 55 yo. (up to 59.5) and need money out of your tax deferred account to live, you can take it out of your 401K w/o penalty and w/o setting up a 72t WD and 2) the feds have very low expense investment choices in the TSP (401K equivalent) so you could easily pay lower yearly fees in the TSP than in an IRA.
Quote:
Originally Posted by HornedToad10
If you do a Roth conversion then you have less raw $$$ in their funds....
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not if you do it right and pay the taxes with funds outside the 401K/TIRA
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03-01-2012, 05:33 PM
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#10
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Recycles dryer sheets
Join Date: Oct 2011
Posts: 122
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Have you talked with a tax person? Our CPA told us converting is not a good idea because of our tax bracket. That advice may change once we both stop working.
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03-01-2012, 06:03 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Feb 2009
Location: Cville
Posts: 1,604
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I moved all my IRA accts and my cash stock acct to Fido several years ago an I have been mostly happy with them since. My initial move was because my 401K is with them and I wanted to get everything in one place. However, I don't expect advice but good tools. I have had a hard time with advisors always wa nting to fit me into a profile. You know, 50/53 pension means this group of funds and this AA. They never want to evaluate my plan and comment on will it work. Besides, if they are wrong will they pay the electric bill?
Rant off
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03-01-2012, 06:12 PM
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#12
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Full time employment: Posting here.
Join Date: Jul 2011
Posts: 723
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Quote:
Originally Posted by Zantastic
In trying to figure out what to do with my $385k FIDO 401K, I met with one of their reps today about possibly moving the 401K to an IRA. There are many good reasons to do this, but my primary one was to take advantage of the next few years when I'll be living off savings and have no income other than a few thousand in dividends. It seemed like the perfect opportunity to do some ROTH conversions with little to no taxes due.
I was shocked that the adviser didn't think it was worth my time to convert. She also seemed to think I'm too focused on the "little" things like expense ratios and keeping taxes low. I said I wanted to do a spreadsheet to compare the expense ratios of the available 401k funds vs. IRA funds and she gave me a look like I was out of my ever lovin' mind.
Please tell me I'm not crazy! (Or if I am, I guess I should know that, too).
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Great strategy. Goofy Fidelity rep. By the way, it's the Fidelity rep who has to say "please consult with your tax advisor" because they are not allowed to give tax advice. Honestly, there's a good chance the rep doesn't understand what you're talking about becuase that's not their area of expertise.
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03-01-2012, 06:27 PM
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#13
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Recycles dryer sheets
Join Date: Feb 2012
Location: Florida's west coast
Posts: 160
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Quote:
Originally Posted by justplainbll
We have accounts with both Fidelity and Vanguard and found Fidelity more accommodating with respect to 401K to IRA to ROTH conversions.
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+1
I have had an account with TRP for over 15 years and had no problems with rollovers and conversions--they were my gold standard.
Then after a couple of job changes after 2000, I ended up with 401ks in Fidelity and Vanguard. In the past 2 years I did rollovers and Roth conversions in both Fidelity and Vanguard. Vanguard was terrible. It was slow. They couldn't even put my company stock through the Roth conversion. I found them not very flexible nor helpful. Maybe the agents were not trained well, but it was a painful experience.
OTOH, Fidelity really did a good job of both the rollovers and conversion. And this year I decided to move the Vanguard monies into the Fidelity acct, it was totally painless and so fast.
That being said, I have yet to find an advisor in any of these companies who can give me much valuable investment advice. I have spent years learning about how to handle my money and investments, learning from my own mistakes. The advisors I have spoken with have not added value to my decisions.
So, if I were the OP I might listen to the advisor but I would do what I felt was best for me.
Norma
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03-01-2012, 06:42 PM
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#14
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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Quote:
Originally Posted by 2moreyears
That being said, I have yet to find an advisor in any of these companies who can give me much valuable investment advice. I have spent years learning about how to handle my money and investments, learning from my own mistakes. The advisors I have spoken with have not added value to my decisions.
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I agree, having both FIDO and VG for over 25 years.
I always looked at any advisor from either firm (along with their annual "free review") as something that could be listened to, but ignored in most cases.
Anyway, I don't use either company for financial advice or decision making, but rather look at them as providing the conduit to allow me to invest as I want to.
Heck, most of us would find better "free advice" on a forum, such as this.
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03-01-2012, 06:59 PM
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#15
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Recycles dryer sheets
Join Date: May 2011
Posts: 154
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Also, don't forget that your money is safer in the 401K vs IRA in a case of a law suit.
My January stmt had a msg stating we can move our after tax money to a roth acc't. within the 401K. It might be worth your while to see if your company offers this too.
Quote:
Your Savings Plan already offers a way of saving for retirement with certain after-tax contributions known as the Roth 401(k). In addition to being able to make Roth 401(k) contributions, effective July 1, eligible participants may also be able to convert certain pre-tax and traditional after-tax money to Roth 401(k) money within the Savings Plan. Previously, this could be accomplished only by rolling over to a
Roth IRA, which is still an option for some participants. As
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Smartmoney website has a worksheet to help decide whether it is smart to xfer to a roth ira at you age.
http://www.smartmoney.com/calculator...1304481621417/
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03-01-2012, 07:08 PM
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#16
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Recycles dryer sheets
Join Date: Jul 2011
Location: SoCal
Posts: 115
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I have three 401Ks with 3 different companies. The advantages of staying with your company 401Ks vs moving to an IRA:
- Typically the 401Ks offer dirt cheap funds to choose from; three of my funds have fees of less than 0.04%.
- 401Ks are typically exempt in lawsuits; IRAs may not be.
Granted, you have more choices with an IRA in a brokerage, however, given the low fees and lawsuit protection, I believe the company 401K is the way to go.
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03-01-2012, 07:24 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
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Sounds like time to drop that FA.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
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03-01-2012, 09:16 PM
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#18
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Quote:
Originally Posted by Zantastic
I was shocked that the adviser didn't think it was worth my time to convert. She also seemed to think I'm too focused on the "little" things like expense ratios and keeping taxes low. I said I wanted to do a spreadsheet to compare the expense ratios of the available 401k funds vs. IRA funds and she gave me a look like I was out of my ever lovin' mind.
Please tell me I'm not crazy! (Or if I am, I guess I should know that, too).
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I think I see the problem-- "your" financial advisor thinks you should have her best interests at heart.
I bet that expense ratio is anything but "little"...
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03-01-2012, 09:16 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,477
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Bad FA? Our Fidelity FA has encouraged us to crunch the numbers for Roth conversions now that I have retired (DH is still working...actually loves certain aspects of his job and is not ready to pack it in) and we'll drop a notch or 2 in tax bracket. We expect to be in a high tax bracket once we retire and SS and RMD kick in as too much of our nest egg is in retirement accounts.
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03-01-2012, 11:26 PM
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#20
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 853
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Quote:
Originally Posted by heirloom
Also, don't forget that your money is safer in the 401K vs IRA in a case of a law suit.
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have you ever been sued? and if so, were you protected by ERISA or whatever it is called?
one's state can also have protections in place.
while a reason to keep funds in a 401k, I wouldn't consider it a strong enough reason to prevent me from rolling over if I needed better investment options, lower fees or to do conversions. while it is certainly a risk, I don't plan on being sued, nor do I know someone who knows someone who has been sued. ymmv.
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