Fidelity Offer

[nwsteve]

Here is a another wrinkle in how many brokerages to keep positions, especially Vanguard and Fido
I got a call from my Fido Private Client Advisor today advising me that Fido was offering some significant bucks for positions transfers from other brokerages. She knows from my Full View that we have some funds with Vanguard. We have about 25% of our positions at Vanguard.
If you move positions worth 1 Million or larger, you get 2500 added to your account. 500k will get you $1250. They will take any amounts--just lower $$ for the move.
My impression is that you do not change any of your positions, they get moved directly to Fido, so no loss of Vanguard positions or expense benefits.
So here is the question. Given a strategy that emphasizes ETFs (can buy any Vanguard ETFs for $8--same as any other sponsor except I-shares which many are free at Fido), is there a good reason not to take up Fido on their offer?
Nwsteve

 

[jerome len]

And, if you have a significant account with Fidelity, they'll send you an Apple gift card worth $500.00 towards the purchase of a new I pad, which they would like you to use with Fidelity apps. I didn't believe it but my friend showed me the letter and gift card.....I have an account with Fidelity but not big enough to get the gift card.....but, if I could move a million, I'd rather have the $2500. Question; do you have to commit to leaving it with them for a certain period of time?

Anwersing you question; I don't believe that Fidelity's ETFs are as numerous nor as low cost as Vanguards. There was a news story about a week ago that Fidelity applied for more ETFs but I don't know when they'll actually happen. I do have a number of Vanguard EFTs and have been very happy with them....no cost to buy them with very low expenses. You (I think) should be able to buy Vanguard ETFs without paying any sales charge....I'd call and ask.

 

[Nords]

My impression is that you do not change any of your positions, they get moved directly to Fido, so no loss of Vanguard positions or expense benefits.
So here is the question. Given a strategy that emphasizes ETFs (can buy any Vanguard ETFs for $8--same as any other sponsor except I-shares which many are free at Fido), is there a good reason not to take up Fido on their offer?

When I transferred my father's VFINX shares to Fidelity, I requested that it be done as an in-kind transfer. Vanguard would not cooperate, so we ended up cashing them out.

You may not have that problem with Vanguard ETFs. And if Vanguard balks, Fidelity will ask you what you want to do.

When Vanguard was pulling their "Consolidate with us!" trick back in 2003-05, it was a disaster. They didn't have the staff to keep up with the transfer-of-assets paperwork, and they screwed up a lot of the IRAs. (Especially beneficiary designations.) It actually resulted in a whistleblower lawsuit from a Vanguard employee. Hopefully Fidelity is ready to put their service behind their money.

 

[Semiretired2008]

When Vanguard was pulling their "Consolidate with us!" trick back in 2003-05, it was a disaster. They didn't have the staff to keep up with the transfer-of-assets paperwork, and they screwed up a lot of the IRAs. (Especially beneficiary designations.) It actually resulted in a whistleblower lawsuit from a Vanguard employee. Hopefully Fidelity is ready to put their service behind their money.

I have money in both. Slowly moving everything to Fidelity... When Fidelity calculates your net worth and the benefits that come with it for them - they count everything. Vanguard only counts what you have in Vanguard products.

Vanguard also has more fees if you slip below their coveted levels also and as we age and the balances go down - Vanguard will get more expensive faster...

Fidelity also gives rebalancing advice - free annually - more often if you have enough money with them, which I do not have, but for a DIY'r annually is enough for me... They will not give you a list of what to or what not to buy, but they will review and offer free advice - it is up to you to pick the individual product within their suggestions. Vanguard will not do this without a charge unless it is for Vanguard products...

This is my perspective with both of them so far - yours may be different - it could just be the advisors I have talked with... Some are more helpful than others (true in Fidelity also - I went through a few before I found a couple that I believed in and felt they knew more than me, which is a biggee in my book - they will give out their direct numbers also)...

 

[Animorph]

ETF's work the same and are available no matter where you hold them. However, some brokers do offer commission-free ETF trades on some ETF's. If you're paying $8/trade at Vanguard there's no reason not to move to Fidelity.

 

[grasshopper]

 

[REattempt]

All these benes are taxable.

 

[Spanky]

All these benes are taxable.

Yes, uncle sam always wants his share.

 

[Dimsumkid]

Yes, uncle sam always wants his share.

Not if you keep your bonuses under $600 per ssn per year. They only generate a 1099 misc for $600 or more.

 

[kaneohe]

Not if you keep your bonuses under $600 per ssn per year. They only generate a 1099 misc for $600 or more.

May well be true that provider does not report but I would be surprised if IRS told you it wasn't taxable Reporting Miscellaneous Income
If you can find that it is explicitly exempt from taxation by recipient ,
I'd be interested in a link..............

What is Taxable?

Taxpayers must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands.

Generally, the IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption. This document discusses a few types of reportable income. Information on how to report other types of income can be found in Publication 525, Taxable and Nontaxable Income.

 

[Dawg52]

Rats. I transferred a good chunk of money to Fido 2 years ago from a local Broker.

 

[pb4uski]

Not if you keep your bonuses under $600 per ssn per year. They only generate a 1099 misc for $600 or more.

It's still taxable. Its just not reported to the IRS so for those who chose not to report it as income their chances of getting caught are lower.

 

[Dimsumkid]

May well be true that provider does not report but I would be surprised if IRS told you it wasn't taxable Reporting Miscellaneous Income
If you can find that it is explicitly exempt from taxation by recipient ,
I'd be interested in a link..............

What is Taxable?

Taxpayers must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands.

Generally, the IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption. This document discusses a few types of reportable income. Information on how to report other types of income can be found in Publication 525, Taxable and Nontaxable Income.

I started violating this since I was 5 yrs old when I got paid $5 for pulling nails removing carpeting for a neighbor! Also never reported interest income from banks when it was under $10. My days as a paperboy for $1/week I was a criminal. Every babysitter I've ever known has never reported their income! I remember helping friends move and getting paid in a meal and/or cash...never reported it to the IRS. If the IRS really wanted to shut this down, they'd require a 1099 for any amount > 0. It would cause way too much processing for businesses to handle. I feel pretty safe I won't got to jail after all these decades.

 

[Bestwifeever]

I started violating this since I was 5 yrs old when I got paid $5 for pulling nails removing carpeting for a neighbor! Also never reported interest income from banks when it was under $10. My days as a paperboy for $1/week I was a criminal. Every babysitter I've ever known has never reported their income! I remember helping friends move and getting paid in a meal and/or cash...never reported it to the IRS. If the IRS really wanted to shut this down, they'd require a 1099 for any amount > 0. It would cause way too much processing for businesses to handle. I feel pretty safe I won't got to jail after all these decades.

You are in soooo much trouble now!

 

[Midpack]

I have money in both. Slowly moving everything to Fidelity... When Fidelity calculates your net worth and the benefits that come with it for them - they count everything. Vanguard only counts what you have in Vanguard products.

Not so from my experience. Our total portfolio at Vanguard always showed our 401ks which changed several times from Cigna, Prudential, Schwab, Con-Agra & TIAA-CREF. We never bothered with having bank assets show up, though I suppose it can be done. Setting it up was a little tedious, but once done it updated automatically. I am sure Vanguard will walk clients through it if necessary. Not only were the outside assets shown in total portfolio, they were included in Portfolio Analyzer and all other tools that I'm aware of. Nothing against Fido, I used to have all my money there years ago...

 

[MichaelB]

I started violating this since I was 5 yrs old when I got paid $5 for pulling nails removing carpeting for a neighbor! Also never reported interest income from banks when it was under $10. My days as a paperboy for $1/week I was a criminal. Every babysitter I've ever known has never reported their income! I remember helping friends move and getting paid in a meal and/or cash...never reported it to the IRS. If the IRS really wanted to shut this down, they'd require a 1099 for any amount > 0. It would cause way too much processing for businesses to handle. I feel pretty safe I won't got to jail after all these decades.

$1 a week? Where did you work? I was a paperboy a long time ago and still remember. Lets see. If the customers paid me I got $0.03 for the daily and $0.05 for the sunday, if the customers paid by mail I got $0.01 x 7. My route was around 35 customers, plus extra routes I took during the summer, and really good Christmas tips. I made a lot more than $1 a week. Under-reporting your income to avoid taxes can be a criminal offense ...

 

[Dimsumkid]

And, if you have a significant account with Fidelity, they'll send you an Apple gift card worth $500.00 towards the purchase of a new I pad, which they would like you to use with Fidelity apps. I didn't believe it but my friend showed me the letter and gift card.....I have an account with Fidelity but not big enough to get the gift card.....but, if I could move a million, I'd rather have the $2500. Question; do you have to commit to leaving it with them for a certain period of time?

Most Fidelity offers have a 9 month time commitment in the fine print. Here's the Apple offer link:

https://scs.fidelity.com/other/offers/registration_tieredapplegiftcard.shtml

I called Fidelity to check on the status of this Apple offer (we did $150k for a $300 Apple card), turns out it didn't get done correctly. I was told this cash offer is called "Cash Acquisition Offer" and only available by phone, no link and goes as low as depositing $50k for $200 cash. Since my Apple deposit didn't take, I can reduce my deposit and do two $50k deposits over 2 ssn's for $400 total cash offers instead.

 

[Dimsumkid]

$1 a week? Where did you work? I was a paperboy a long time ago and still remember. Lets see. If the customers paid me I got $0.03 for the daily and $0.05 for the sunday, if the customers paid by mail I got $0.01 x 7. My route was around 35 customers, plus extra routes I took during the summer, and really good Christmas tips. I made a lot more than $1 a week. Under-reporting your income to avoid taxes can be a criminal offense ...

That's all we got paid back in the 1970's, it was the Chicago Daily News. They paid us a flat amount. I hated trying to collect from customers, all the excuses why they couldn't/didn't have the money. It was more trouble than it was worth and only stayed a couple of months.

 

[golfnut]

That's all we got paid back in the 1970's, it was the Chicago Daily News. They paid us a flat amount. I hated trying to collect from customers, all the excuses why they couldn't/didn't have the money. It was more trouble than it was worth and only stayed a couple of months.

I had a Daily News paper route in Chicago back in late 60s. Nice thing about it was we did not have to collect $ from customers. If we went thru the week without a customer complaint, we got a $1.25 weekly bonus. Along with the Daily News, we also delivered Polish and Bohemian newspapers (names of these I long forgot).

 

[eytonxav]

That's all we got paid back in the 1970's, it was the Chicago Daily News. They paid us a flat amount. I hated trying to collect from customers, all the excuses why they couldn't/didn't have the money. It was more trouble than it was worth and only stayed a couple of months.

I was a paper boy back in the early 60s and made quite a bit more than $1/wk. IIRC it was more like $12-14/wk delivering about 60 newspapers and had to collect cash from the customers. I did that job for about 2 years.

Edit - actually I think that pay was every two weeks

 

[Semiretired2008]

Not so from my experience. Our total portfolio at Vanguard always showed our 401ks which changed several times from Cigna, Prudential, Schwab, Con-Agra & TIAA-CREF. We never bothered with having bank assets show up, though I suppose it can be done. Setting it up was a little tedious, but once done it updated automatically. I am sure Vanguard will walk clients through it if necessary. Not only were the outside assets shown in total portfolio, they were included in Portfolio Analyzer and all other tools that I'm aware of. Nothing against Fido, I used to have all my money there years ago...

I have money in both. Slowly moving everything to Fidelity... When Fidelity calculates your net worth and the benefits that come with it for them - they count everything. Vanguard only counts what you have in Vanguard products.

Poorly worded maybe - I meant Vanguard does not count "non" Vanguard products towards you qualifying for special privileges...

 

[MichaelB]

I delivered papers for almost 4 years in Farmington Connecticut. Fond memories, nice customers & good people, very generous and always gave good tips. Collecting was fun because I collected coins. Made enough money to pay my first year of (expensive private) university. Got hit by a car. Won lots of sales contests and got to see the Rockettes Christmas show twice.

 

[MichaelB]

Don't mean to hijack the thread. Back on topic, I thought Fidelity determined if the bonus is taxable, not the IRS. If they classify it as a cash incentive it is taxable, but if they determine it is directly related to the assets it could be a rebate similar to airline miles or credit card cash rebates.

 

[kaneohe]

Don't mean to hijack the thread. Back on topic, I thought Fidelity determined if the bonus is taxable, not the IRS. If they classify it as a cash incentive it is taxable, but if they determine it is directly related to the assets it could be a rebate similar to airline miles or credit card cash rebates.

good point.........here's what a few guys think......

http://thefinancebuff.com/brokerage-account-signup-bonus-taxable-or-not.html

Are Credit Card Rewards, Frequent Flyer Miles, And Bonuses Taxable?

They seem to share the opinion that they are:
1) taxable......if deposited into a taxable account
2) tax-deferred ...........if deposited into TIRA
3) not taxable............if deposited into Roth (one guy anyway)

 

[nwsteve]

Don't mean to hijack the thread. Back on topic, I thought Fidelity determined if the bonus is taxable, not the IRS. If they classify it as a cash incentive it is taxable, but if they determine it is directly related to the assets it could be a rebate similar to airline miles or credit card cash rebates.

Chatted with my Fido rep again today. She confirmed the bonus will be 1099 since it is over 599.
Looks to me it will show up on my 2012 return as misc income
Nwsteve