Fidelity 401k is sneaky... Work around

[Surewhitey]

So wanted to move DW's biggest holding Fido MM to Vanguard MM (3% difference yld) & it would not let me. So called them & they said it was a competing fund & I'd have to move it to another fund for 90 days before moving it to the Vanguard MM.

I said "can't I just move all the other funds to the Vanguard MM & then the FIDO MM to the others?"... "yep" was his answer. Done. Seems sneaky and bad biz to do if the other fund is one of the options provided.

 

[Al18]

Fidelity MM funds are currently paying about 5%. I find it hard to believe Vanguard MM fund is paying 8%. What am I missing?

 

[big-papa]

Fidelity MM funds are currently paying about 5%. I find it hard to believe Vanguard MM fund is paying 8%. What am I missing?

At Fidelity SPAXX, SPRXX and FZDXX are all around 5% as you noted. At Vanguard VMRXX, VMFXX, and VUSXX are all around 5.3% Most of the difference between Fidelity and Vanguard's MM funds are mainly due to higher e/r's at Fidelity.

Perhaps the OP meant 0.3% instead of 3%?

Cheers.

 

[Andre1969]

Maybe he's talking about the margin, spread, or whatever you call it? For instance, if Fidelity is paying 5.15% and Vanguard is paying 5.3%, then Vanguard is about 3% higher. Well technically 2.9126...% but you get the idea.

 

[big-papa]

So wanted to move DW's biggest holding Fido MM to Vanguard MM (3% difference yld) & it would not let me. So called them & they said it was a competing fund & I'd have to move it to another fund for 90 days before moving it to the Vanguard MM.

I said "can't I just move all the other funds to the Vanguard MM & then the FIDO MM to the others?"... "yep" was his answer. Done. Seems sneaky and bad biz to do if the other fund is one of the options provided.

Anyway, outside of our questions on what you mean by 3% difference, what you describe is pretty common in 401K's that I've had. My current one from my former employer has 2 competing funds, both by Vanguard: One is a MM fund and the other is a stable value fund, and these have the 90 day restriction as well, with the same way to get around it.

A question though - If you do this, are you in danger of the dreaded "round trip violation"? That is, selling a mutual fund at Fidelity and then repurchasing it within 30 days?

Cheers
Big-Papa

 

[calmloki]

Fidelity cash sweep account is paying about 2.7% APY, but that's not Fidelity MM account..

 

[latexman]

My company’s Fidelity 401k has FRGXX MM fund. It’s 7 day yield is 5.25%. Is your wife’s 401k a company 401k or a solo 401k? I didn’t think a company’s 401k could be transferred.

My Fidelity IRA core position/cash sweep account (?) is SPAXX. It’s 7 day yield is 4.97%

 

[Surewhitey]

OK, so maybe not exactly a MM fund, but they did say a competing fund with the Vanguard MM fund. It's horribly under performing at the moment with a 2.3% yield vs 5.28% Vanguard VFMXX

It's called Managed Income Portfolio II Class 4

Mega insurance company 401k.

 

[Surewhitey]

Fidelity cash sweep account is paying about 2.7% APY, but that's not Fidelity MM account..

We also have a cash management account with the same sweep account. I keep minimal cash there.

 

[Koolau]

Just me, but I wouldn't jump through any hoops to get that small a change in interest. Just as likely, as soon as you do, the rates will shift the other way. Not worth my mental concentration but YMMV.

 

[Surewhitey]

Just me, but I wouldn't jump through any hoops to get that small a change in interest. Just as likely, as soon as you do, the rates will shift the other way. Not worth my mental concentration but YMMV.

And extra $4k annually if it stays the same. Worth 15 minutes to do it, imo.

 

[big-papa]

And extra $4k annually if it stays the same. Worth 15 minutes to do it, imo.

Agree - it's a big haul from 2.7% to something around 5%, which is where most all of the MM's play today...

Cheers.

 

[Koolau]

And extra $4k annually if it stays the same. Worth 15 minutes to do it, imo.

Heh, heh, you have a way (I mean WAY) bigger sweep account than I have. Go for it.

 

[Surewhitey]

Heh, heh, you have a way (I mean WAY) bigger sweep account than I have. Go for it.

Curse of being married to someone in insurance. Too much of a safety net.

 

[Koolau]

Curse of being married to someone in insurance. Too much of a safety net.

Heh, heh, no such thing as TOO big a safety net, I guess.