Author Topic: Company changing from Fidelity to Alight  (Read 1884 times)

b4u2

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Company changing from Fidelity to Alight
« on: February 22, 2019, 08:01:31 AM »
So the company I work for got bought and the new company is changing providers on basically everything. The main one is moving from Fidelity to Alight. I have never heard of Alight until now. We have been with Fidelity for the past twelve years I think so I have never had to do anything. I have about $260k in my account. Will I lose anything by switching over to Alight or should I consider some type of rollover and let that 260 stay with Fidelity? I rarely move money around so this is nerve wracking even having to think about doing this.
If I let the money move over to Alight do I "lose" the fidelity funds and the dollar cost averaging of the last 12-20 years? Will this money move be all new funds and accounts, meaning that the Fidelity funds don't move to Alight?
What's my best option here? I am no financial genius but feel I have done pretty good with what I have invested and I am scared of a change like this. I am trying to still retire at 55 which is in 14 years. I do have a pension here as well.

RWD

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Re: Company changing from Fidelity to Alight
« Reply #1 on: February 22, 2019, 08:32:43 AM »
Most of your questions should be answered by your HR department. You won't "lose" your dollar cost averaging. That is reflected in the current value of your portfolio. I took a quick peek at Alight's website and found a list of fund families which is very long and includes Fidelity and Vanguard. So it is possible you may be able to keep your same funds. But again you'll need to talk with HR to get the specifics.

b4u2

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Re: Company changing from Fidelity to Alight
« Reply #2 on: February 22, 2019, 09:05:45 AM »
They are having meetings the first week of March to go over all the details. The new company is bigger so they get to force us to change. Hopefully Alight is as easy to use as Fidelity.

MustacheAndaHalf

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Re: Company changing from Fidelity to Alight
« Reply #3 on: February 22, 2019, 10:27:08 AM »
Alight's home page mentions "Self Directed Brokerage Accounts (SDBA)", which in general means buying whatever you want provided it's an ETF or stock.  There might be a way to still invest with low expense ratios.

I suspect your "dollar cost averaging" question relates to taxes.  Money that moves around within a retirement account has no tax implications.  It's only money leaving the account that could incur tax (and maybe penalties).  If you have a pre-tax 401(k), you've paid no taxes on those assets.  Everything distributed from the account gets taxed.  If you have a Roth 401(k), taxes have been paid on the entire amount, so as long as you follow the IRS rules, you don't pay taxes.

The most likely outcome, despite how I started this post, is that Alight will force you to pick from a new selection of funds.  Your goal should be the lowest expense ratio, because of two benefits: low costs mean more money for you, and low costs also tend to be passive index funds, which have a track record of beating actively managed funds.  (SPIVA data shows the S&P 500 beats 80-90% of active funds, depending on the time frame).

b4u2

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Re: Company changing from Fidelity to Alight
« Reply #4 on: March 05, 2019, 09:34:13 AM »
So my goal is to retire at age 55 which puts me at 14 years. I have been contributing pre-tax into the 401k. Should I stick with the pre-tax like I have been or look into a Roth 401k?
The new provider (Alight) offers 8 core funds and then they offer a mutual fund brokerage window. The brokerage window is what I am probably going to use and it has over 8,000 funds to choose from. This portion does come with a higher cost, $16 quarterly maintenance fee. They will put all my money into a money market fund and then I can start trading the next day. So I lose the averaging that I have been putting into these funds for about the last 8 years or more. Am I looking at this wrong?

LAGuy

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Re: Company changing from Fidelity to Alight
« Reply #5 on: March 09, 2019, 03:14:16 AM »
There's probably nothing you will actually be able to do, other than quit. I was part of a similar buyout. It was actually a pre packaged bankruptcy. We were technically unemployed and had to re apply, be hired, etc. Some folks were not hired, and did not receive a severance. But for the purposes of our 401k it was not considered a break in service (I asked) and as such no rollover could be done.

b4u2

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Re: Company changing from Fidelity to Alight
« Reply #6 on: April 01, 2019, 09:26:34 AM »
Yeah we have no choice. I met with a local financial guy through my credit union. We talked about my goals and he went over numbers with me. It was nice to talk to someone and see that my numbers are in line with what I thought they should be. We also came up with a plan for new investments.
One move is to go ahead and use the brokerage side for most of my "old" money.  50% of the old money was invested in Vanguard Primecap (VPMAX) but that fund is now closed to new investments. I am thinking of putting that 50% in Fidelity Blue Chip Growth (FBGRX). Anyone see any issues with this fund or have a suggestion of something better?
30% will go back into Fidelity EXTD MKT (FSMAX).
15% will move from Vanguard Total Bond  (VBMPX) to an Income Fund through UTC. It's stable value type fund based on fixed income securities.
The rest will stay in my company stock.
Some of this will be done through the Brokerage Window and have some small fees and restrictions on buying. My main plan is to make a one time buy and hold. Obviously review about twice a year to be sure it's making money.

New investments
60% into a Equity fund which tracks the S&P 500
15% into a Small Company Stock Fund. It seems to track the Russell 3000 Index
15% into International Equity Fund.  Tracks the MSCI EAFE Index
10% into the Income Fund.
Those four funds are basically the best of the worst that we have available. Quite a few people have gone and talked to their financial advisor and most seem to agree that this 401k offerings are crap. Maybe when UTC splits up we can get a better plan but for now this is what we all have to live with.