Author Topic: Non-Prototype 401K HELP!  (Read 3907 times)

natb2347

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Non-Prototype 401K HELP!
« on: January 30, 2017, 06:04:06 PM »
As many mustachian readers can probably relate - thinking about and reviewing one's finances can be a sobering experience at first.  Although I have made several awesome changes that I will see immediate benefits from (like canceling my cable and simply changing my account to my husbands name for the internet only to get the new promo pricing - saving us $140 PER MONTH!!!)  I discovered two things related to my 401K that is keeping me up at night and I need help on what to do.  What I learned below was:

1.  Putting money away in my non-prototype Fidelity 401K alone is not enough.  I actually need to manage it!?!  I never knew this - no one ever told me this, and as a result the last 3 years I may as well have had it in a savings account.   And I have likely lost thousands by not paying attention to this.   I immediately did a google search and there is not much digestible information on what my options are and then I went to your blog to search "non-prototype" and nothing came up!

2.  When I called Fidelity to get some advice on what to do with my funds they said they could only offer advice to the account owner (our CFO and the owners of the company)?!?!? 

I am NOT comfortable making decisions on money like that and I need to know what my options are to make those employees get off their asses and start making me some money.  My company does not match funds but they do offer a safe harbor contribution which I think is about 3% of my gross salary.  I don't want to lose that contribution but this seems like the ONLY benefit to having any money in this account.  Part of me wants to take that money right out and out it into a Betterment or Vanguard fund where I can get some assistance and see some returns.  But I am sure it's not that simple.  I just want to have a 90%stock/10% bond setup.

What can I do??

Please help!

MDM

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Re: Non-Prototype 401K HELP!
« Reply #1 on: January 30, 2017, 08:03:59 PM »
1.  Putting money away in my non-prototype Fidelity 401K alone is not enough.  I actually need to manage it!?!   I just want to have a 90%stock/10% bond setup.

What can I do??
You could do a three-fund portfolio, something such as
70% Fidelity Total Market Index Fund Premium Class (FSTVX)
20% Fidelity Total International Index Fund Premium Class (FTIPX)
10% Fidelity U. S. Bond Index Fund Investor Class (FBIDX)

NoStacheOhio

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Re: Non-Prototype 401K HELP!
« Reply #2 on: January 31, 2017, 06:39:17 AM »
As many mustachian readers can probably relate - thinking about and reviewing one's finances can be a sobering experience at first.  Although I have made several awesome changes that I will see immediate benefits from (like canceling my cable and simply changing my account to my husbands name for the internet only to get the new promo pricing - saving us $140 PER MONTH!!!)  I discovered two things related to my 401K that is keeping me up at night and I need help on what to do.  What I learned below was:

1.  Putting money away in my non-prototype Fidelity 401K alone is not enough.  I actually need to manage it!?!  I never knew this - no one ever told me this, and as a result the last 3 years I may as well have had it in a savings account.   And I have likely lost thousands by not paying attention to this.   I immediately did a google search and there is not much digestible information on what my options are and then I went to your blog to search "non-prototype" and nothing came up!

2.  When I called Fidelity to get some advice on what to do with my funds they said they could only offer advice to the account owner (our CFO and the owners of the company)?!?!? 

I am NOT comfortable making decisions on money like that and I need to know what my options are to make those employees get off their asses and start making me some money.  My company does not match funds but they do offer a safe harbor contribution which I think is about 3% of my gross salary.  I don't want to lose that contribution but this seems like the ONLY benefit to having any money in this account.  Part of me wants to take that money right out and out it into a Betterment or Vanguard fund where I can get some assistance and see some returns.  But I am sure it's not that simple.  I just want to have a 90%stock/10% bond setup.

What can I do??

Please help!

I think your account may be similar to what my wife had at her last job. It turned out she wasn't a trustee on her own account.

If it's just a Fidelity brokerage account, then you should be able to buy Fidelity funds for no fee.

FSTVX/FSTMX is their VTSAX/VTSMX equivalent (total U.S. stock index)
FSITX/FBIDX is their U.S. bond index
FSGDX/FSGUX is their International (ex-US) index

I'd suggest talking to HR about who really owns the account, and whether or not you can do an in-service rollover. If you aren't contributing more than $5,500, and you're within the income limits, just use an IRA.

yachi

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Re: Non-Prototype 401K HELP!
« Reply #3 on: January 31, 2017, 07:17:51 AM »
Generic terms for this setup are:
Investment-Only Retirement Account
Non-Custodial Plan

Vanguard does a better job of explaining how this account is set up:

"The Vanguard investment-only program is designed for employers who have a retirement plan with another firm and want to offer their employees a wide range of competitive, no-load Vanguard investments. Your employees can invest in Vanguard funds while your plan administrator continues to serve as trustee and provides recordkeeping."

natb: Your employer should have another company that serves as the plan administrator:  ADP, American Funds, Employee Fiduciary, maybe Charles Schwab, but I would guess it's a lesser known administrator.  This administrator should provide periodic balance statements, a website to see your account and choose investments, etc.  Your HR person seems to have decided the administrator's investment options are bad, and contracted with Fidelity to provide certain Fidelity funds in this account for you to select.