Mechanics of Fidelity IRA Withdrawal

[Katsmeow]

OK. I feel like I have forgotten something probably because I don't do a lot of transactions. But I am stumped.

I want to make a single withdrawal from my IRA. I have no cash in the account right now. Everything is invested.

I am positive that in the past I have gone there and been able to initiate a transaction to transfer $X to my bank account by selling $X from Fund A.

However, I have obviously forgotten something as every time I try to do it, Fidelity says I can't do it since I have no cash in my account.

I have tried doing it as a transfer from the IRA to my bank account. But, it says I have no Cash and just stops.

I also tried to go to retirement distributions and then to schedule a withdrawal. But, same thing. Says I don't have enough cash.

My recollection is that the last time I did this I was asked if I wanted to sell something so I would have the cash. I said that I did and selected what to sell and then it all went through. The next trading day they would sell $X at the end of the day and then $X would be sent to my bank account.

I did find a place where I could sell $X and then it would go into cash, but it would not be transferred to my checking account.

I know I've done this before, not that long ago.

Have they changed their process or is this because it is the beginning of the year or what?

 

[RobbieB]

Probably have to sell shares (trade) first and then take cash after trade settles.

 

[frayne]

Probably need some type of money market sweep account set up for settling any stock, ETF or MF sale proceeds and then draw your cash distributions from that account sent to your bank.

 

[MRG]

Redeem the shares and then you can transfer money out of Fidelity. After the sale check your "balance" tab and you can see when your cash is available for transfer.

I've done it several times this year.

 

[gauss]

Were you using a Vanguard Mutual Fund (non-brkokerage) IRA in the past to successfully do this? If not Vanguard, perhaps some other Mutual Fund (non-brokerage) IRA?

This sounds like something that was possible with Mutual Fund accounts but not brokerage accounts. Non-margin brokerage accounts would have a hard time sending you money for a $0 balance account before the cash settles a few days later.


-gauss

 

[Katsmeow]

Maybe I wasn't clear. The problem is that I am not being allowed to do what I did in December a few weeks ago. That is, tell Fidelity I want to transfer $X to my bank account and Fidelity then asked me what fund I want to sell to do this. This is all done simultaneously. The sale and then the transfer take place with no further transaction needed by me.

Here is the issue. I know I could sell shares. Wait until they are in cash. Then, the next day do a new transaction to transfer the cash out.

But -- I have been at Fidelity for several years and have NEVER had to do it that way.

That is what baffles me. I am not able to do what I did a few weeks ago.

There are two possibilities. I have forgotten a mechanical step and am not going to the right place to do this. Possible since I don't do it that often -- although I did so last month.

The other possibility is that Fidelity no longer allows me to do what I could do a few weeks ago.

Is there anyone with a Fidelity account who know which possibility is correct. If I have just missed a step what do I need to do?

 

[Katsmeow]

Were you using a Vanguard Mutual Fund (non-brkokerage) IRA in the past to successfully do this? If not Vanguard, perhaps some other Mutual Fund (non-brokerage) IRA?

This sounds like something that was possible with Mutual Fund accounts but not brokerage accounts. Non-margin brokerage accounts would have a hard time sending you money for a $0 balance account before the cash settles a few days later.

The accounts in question are at Fidelity. I have an IRA at Fidelity. I used it 2 weeks ago in just this way. Initiated a transfer to my bank and then specified which fund I wanted to sell to get the cash.

There is nothing different with this transaction than the one 2 weeks ago. Exact same accounts involved. Same IRA, same bank account. That is why it is so puzzling to me.

 

[MRG]

The accounts in question are at Fidelity. I have an IRA at Fidelity. I used it 2 weeks ago in just this way. Initiated a transfer to my bank and then specified which fund I wanted to sell to get the cash.



There is nothing different with this transaction than the one 2 weeks ago. Exact same accounts involved. Same IRA, same bank account. That is why it is so puzzling to me.

Are you using the app or the website?

 

[CRLLS]

Have you seen this Fidelity form? If I understand correctly, it seems straight forward and is just as you did earlier.

https://www.fidelity.com/bin-public...customer-service/withdrawals-ira-one-time.pdf

 

[georgemoe]

I have the same situation as OP. Did a withdrawal in October to be sent to Ally and then asked what I wanted to sell. Worked fine. Did a test on Friday for my January withdrawal and same issue. Wants to go to Cash then requiring me to create a second transaction once settled to transfer to Ally. OP you are not crazy. But then again, maybe we both are.

 

[Katsmeow]

Are you using the app or the website?

Website. But I just went and checked the app and same problem.

I have the same situation as OP. Did a withdrawal in October to be sent to Ally and then asked what I wanted to sell. Worked fine. Did a test on Friday for my January withdrawal and same issue. Wants to go to Cash then requiring me to create a second transaction once settled to transfer to Ally. OP you are not crazy. But then again, maybe we both are.

Whew! I am honestly glad to see this. Well, sorta. I hoped someone had a solution. I guess I will try it Monday and if it doesn't work I will call them. If they have changed this functionality that is kind of a pain.

Have you seen this Fidelity form? If I understand correctly, it seems straight forward and is just as you did earlier.

https://www.fidelity.com/bin-public...customer-service/withdrawals-ira-one-time.pdf

I have not seen the form. When you do it through your browser you don't fill anything out like that. But, the online process accomplished the same purpose.

 

[CincyDave]

I would suggest just calling Fidelity and ask if their procedures changed.

 

[CincyDave]

I just tried to start a withdrawal and got the message that I didn't have enough cash, so it looks like you have to transfer to your cash account before you can withdraw. I can't speak as to if this is different for me as I haven't taken any withdrawals before.

 

[Katsmeow]

I would suggest just calling Fidelity and ask if their procedures changed.

Yes, I plan to do that. Honestly if they have changed this then that is a significant negative for Fidelity. While I don't do a ton of withdrawals when I am wanting to do one I generally want to do it then. I don't want to have to sell something, wait for that to go through and then transfer. I tried to set up withdrawals today from Fidelity and Vanguard and had no problem with the Vanguard ones. (Same procedure - set up withdrawal and sell fund to get the cash).

 

[CincyDave]

Yes, I plan to do that. Honestly if they have changed this then that is a significant negative for Fidelity. While I don't do a ton of withdrawals when I am wanting to do one I generally want to do it then. I don't want to have to sell something, wait for that to go through and then transfer. I tried to set up withdrawals today from Fidelity and Vanguard and had no problem with the Vanguard ones. (Same procedure - set up withdrawal and sell fund to get the cash).

I agree and don't see why they would have changed it. Just seems like an extra unnecessary step. Let us know what you find out if you talk to them.

 

[PaunchyPirate]

I wonder if it's some functionality that they shut down for the holiday weekend, but will re-activate today. Perhaps to do some back end system maintenance. Or perhaps they always shut it down on holiday weekends.

 

[CRLLS]

Have you tried just calling and having them setup the whole transaction rather than you filling out on-line forms? They will explain it and fill out the forms themselves. When I did my EOY Roth conversion, the guy on the other end of the phone did everything for me. He transferred funds, sold other funds to pay the taxes. All done with no "forms" to fill out or waiting for something to clear before doing another step. Maybe there was multiple steps behind the scenes, but it was all 1 stop shopping for me.

 

[statsman]

I wonder if it's some functionality that they shut down for the holiday weekend, but will re-activate today. Perhaps to do some back end system maintenance. Or perhaps they always shut it down on holiday weekends.

That was something along the lines of what I was thinking, mainly end of year processing. I wonder if the requirement to cash first still is happening this morning.

 

[Al18]

The stock market has been closed Saturday and Sunday and you can’t sell shares when the market is closed. You should be able to enter your sell order today, which typically requires 2-3 days to complete

 

[Katsmeow]

I talked to Fidelity. She didn't know why this was changed but did check with the back office who said it appeared to be a "website update." That means that is a permanent change unless they decide to change it later.

She was able to do the transaction for me over the phone which was fine but took time to get it done. It looks like going forward I have to sell first, wait for that to process and show up. Then, go in and do a transfer to my bank account.

The other alternative is to take 10 minutes and do it by phone.

I don't love either of these options. Doing it in two transactions is a pain and possibly results in a delay of getting the money (probably why they did this). The phone alternative is probably what I will do but it requires 10 minutes to do what I used to could do in 2 minutes.

The stock market has been closed Saturday and Sunday and you can’t sell shares when the market is closed. You should be able to enter your sell order today, which typically requires 2-3 days to complete

Previously you could indeed put in the order while the market was closed. You could say sell X and then send the cash to my bank account. I did that before while the market was closed. It would be settled after the next trading day. Now you can't do that in one transaction unless you call them. You have to do a transaction to sell (which you can initiate while the market is closed). Wait for it to settle. Then do a transaction to send you the money. Such a PITA.

 

[CincyDave]

Thanks for clarifying. Seems like a strange thing to change. Sometimes takes a long hold to even get a Fidelity rep on the line if you go the phone route.

 

[CRLLS]

Well, I'm glad that you could at least complete the desired transaction over the phone. FWIW, I don't think 10 minutes is an inordinate amount of time to do it over the phone. It would take me longer than that to drive to my bank and make any deposit in person. It also would take me about that amount of time to open my computer, log into Fido, find the appropriate webpage (if it existed), fill out the form, double check all the inputs, click acceptance, save a copy of the form for proof/posterity and then close out the page.

I am not as pessimistic as some might be. If the option went away during a backroom web update doesn't necessarily mean it was an intentional change. There are too many times updates (in general) have been less than successful or completely as intended.

 

[jazz4cash]

Can’t you issue the sell order and schedule the transfer a few days from now to permit time for settlement? That is still two transactions but a single web session.

I actually think I prefer the two step process so I could place a limit order in case the stock tanks after I place an order.

 

[swakyaby]

Can’t you issue the sell order and schedule the transfer a few days from now to permit time for settlement? That is still two transactions but a single web session.

I’m pretty sure Fidelity’s software program will not allow you to schedule a future transfer of cash when there is currently not enough cash in the account to complete the future transaction.

 

[RetiredHappy]

It is a trait (fault) of our own paranoia, we always have cash in the account in anticipation for money transfer, including for RMD. This morning, we just transferred out partial RMD online and it took about 20 seconds for the transaction and money to show up in My Smart Cash account.