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Simple IRA - Fidelity or Vanguard
Old 06-14-2012, 09:02 PM   #1
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Simple IRA - Fidelity or Vanguard


I've been lurking for a while on these forums without signing up, but I now have a question that I'm struggling to find an answer to.

I work for a small company of 10 people that had a simple IRA through Ameriprise. After being there for about a year I finally realized that they were charging an absurd 5.75% sales charge on every fund purchase. After some struggles, I've gotten my company to offer a second option for a Simple IRA, but they've asked me to evaluate and recommend which company that should be.

My immediate thoughts are either Fidelity or Vanguard because I have a Roth at Vanguard and my wife's 401K is at Fidelity. I like both just fine but I'm having a difficult time finding distinguishing factors that would give one the edge. Does anyone have any experience with Simple IRAs at either company?

Thanks for any help.

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Old 06-14-2012, 09:11 PM   #2
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We have IRAs with both companies. They are both excellent in offerings (i.e, variety of funds), fee and customer service.

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Old 06-14-2012, 09:11 PM   #3
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If your company has someone handling the IRA they are still going to add a management fee to Vanguard or Fidelity. There shouldn't be any fee to get in but the ER will be much higher than the standard fee. Check this out first and see who is cheaper and what fees have to be paid.
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Old 06-15-2012, 05:01 AM   #4
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I have both. Fidelity seems to offer a wider range of services and has more research info. Vanguard is arranged better for straight Mutual Fund investing, but who is cheaper to handle a Simple IRA - only they could answer that one.
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Old 06-15-2012, 06:20 AM   #5
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I prefer Vanguard because it is owned by its fundholders (sort of like a cooperative or mutual company) but both are fine companies.
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Old 06-15-2012, 09:47 AM   #6
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I have IRAs with both, no problems or issues with either.
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Old 06-15-2012, 10:25 AM   #7
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Quick facts

Participants Business owners with 100 or fewer employees.
Employer contributions
Option 1: Match up to 3% of each employee's compensation or $11,500, whichever is less.
Option 2: Contribute 2% of each eligible employee's compensation up to $5,000 for 2012.*
Contributions are deductible as a business expense.
Employee contributions For 2012, up to $11,500 ($14,000 if age 50 or older). Employees are not required to contribute in any given year.
Investment choices More than 100 Vanguard mutual funds.
Eligibility No age restrictions. Employees must earn a minimum amount specified by the employer during any two preceding years and expect to earn at least $5,000 in the current year.
Account service fees $25 per year for each Vanguard fund in a SIMPLE IRA. This fee is waived if you are a Voyager, Voyager Select, or Flagship client.



Savings Investment Match Plans for Employees (SIMPLE–IRAs) make it easier for self-employed individuals and small businesses with 100 employees or fewer to offer a tax-advantaged retirement plan, funded by employer contributions and elective employee salary deferrals.

Tax benefits Employer contributions are deductible as a business expense; tax-deferred growth, pre-tax contributions for participants.
Fees $350 per plan1 collected annually from the employer; or $25 per participant1 collected annually from participants' accounts.
Eligibility Employer has 100 or fewer employees who earned at least $5000 in the preceding year. Cannot maintain any other employer-sponsored retirement plan.

Participant has earned at least $5,000 from the employer in any two preceding years and is expected to earn $5,000 in the current year2.
Contribution limits Plan Sponsor: Mandatory 3% matching contribution or 2% non-elective contribution.

Participant: Up to 100% of compensation up to $11,500 ($14,000 if age 50 or older) annually.
Eligible Investments Only certain fund families have mutual funds that are eligible investments for SIMPLE IRAs with no minimum initial investment requirement.
Establishment deadline For current tax year - set up and notify employees by October 13.
Administrative responsibilities No plan tax filings with IRS. Certain annual employee notifications.
Withdrawals Minimum required distributions starting at age 70. 10% early withdrawal penalty (25% for first two years of plan participation) if under age 59, subject to certain exceptions.

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