Author Topic: Rollover my 401k Vanguard --> Fidelity? (New Job)  (Read 7579 times)

bryanth

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Rollover my 401k Vanguard --> Fidelity? (New Job)
« on: August 25, 2016, 06:58:40 AM »
I am starting work at another company that does their 401k through Fidelity, as opposed to Vanguard, which is what I had at my previous employer. I have a couple questions, as I've never changed companies, and am not sure how fidelity stacks up. I have other investments (Roth, etc.. with Vanguard that I plan to keep contributing to, as I like their company values)

1. Should I rollover?
     - Roughly $75,000 currently in 401k
     - I am in the 25% tax bracket.
     - I'm in my mid 20's.

2. What fund should I put my future contributions in?
     - I currently use the Vanguard "Target Retire 205X" --> I like this type of allocation method, not having to pick percentages of 5+ stocks
     - Does Fidelity offer something equivalent to the Target Retire?
     - If not, is there a set and forget allocation that people use?

seattlecyclone

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #1 on: August 25, 2016, 08:07:11 AM »
401(k) options really depend on what your employer has selected. Vanguard and Fidelity are just running things. My last employer actually had Vanguard target date funds in their 401(k) even though the plan was managed by Fidelity.

As to your first question, closing out your old 401(k) is generally a good idea if only to simplify your life and have fewer accounts to deal with. In general you should roll it over to your traditional IRA instead. The reason is that you, not your employer, gets to choose the investments in your IRA. You might instead choose to roll it over to your 401(k) if either your income is or will be high enough that you would need to use the back door to make Roth IRA contributions, or if your new 401(k) has "institutional" class index funds with lower expense ratios than an individual investor can get in their IRA.

Jack

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #2 on: August 25, 2016, 08:48:44 AM »
Your new 401k almost certainly has a target-date fund. Apparently, Fidelity's are named "Freedom Fund <year>." For example, VFFVX is equivalent to FDEEX (but it looks like the Vanguard one is better because it has much lower expenses).

To decide whether you should roll over or not, compare the expenses of your current 401k to the expenses of the new 401k and your IRA. (First compare the expense ratios of the Vanguard target date fund to that of the Fidelity target date fund, then look at other fees attached to the accounts themselves.) If the old 401k is cheapest, keep it. If it isn't, roll it over to whichever account (new 401k or IRA) is cheapest.

Note that your tax bracket is irrelevant to the question of whether you rollover or not -- rolling over from a traditional 401k to a traditional 401k or traditional IRA is not a taxable event. Neither is rolling over from a Roth 401k to a Roth 401k or Roth IRA. Your tax bracket only matters if you want to convert from traditional to Roth.

Frankies Girl

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #3 on: August 25, 2016, 10:44:12 AM »
I wouldn't personally bother with rolling over a Vanguard 401k unless I really hated the idea of having funds other places. It's a great place to have an account. You'll have to decide if there are advantages to rolling your 401k to a traditional (rollover) IRA maybe tho. (401K plans can offer more protection from judgements/liens in certain states compared to IRAs, but usually it's to your benefit to change it over to an IRA to open up your investing options - but if you are planning on leaving it in a Vanguard target date fund, then it isn't as big a deal to jump on this).

As far as dealing with Fidelity, it's fine. And yes their target date funds are all labeled with the naming convention "Fidelity Freedom" XXdate. There should be many of those available in your plan choices - they are pretty popular for company-sponsored plans.

There are plenty of index fund options with Fido, so if you care to check, here is a handy guide to the Vanguard equivalents:
https://www.bogleheads.org/wiki/Fidelity

NoStacheOhio

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #4 on: August 25, 2016, 10:48:51 AM »
If you post the list of options available within your specific plan, we can offer better advice. Otherwise, it's just guessing.

My employer plan is at Fidelity, but we have funds from a variety of companies (including Vanguard, VIIIX anyone?).

Full_Beard

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #5 on: August 25, 2016, 11:49:29 AM »
And I'm pretty sure that if you leave your employer, you can also rollover that 401k into your IRA, which often means you can have more control over it. For example, I have a traditional IRA with USAA, and I set that up as a brokerage account so I can buy stocks, index funds, mutual funds, etc. When I left one employer, I rolled the 401k into the USAA account so I have greater freedom to invest. With my new employer, I just started a new 401k.

jjandjab

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #6 on: August 25, 2016, 12:02:31 PM »
I have most of my investments at Fidelity and they are great, but so is Vanguard. Fidelity has come a long way over the years to rival Vanguards low ER fund offerings.

One major thing based on a point earlier - If you want a target date fund at Fidelity, I personally would make sure it is a "Fidelity Freedom INDEX Fund". The one mentioned in an earlier post has an ER of 0.77% (FDEEX) as it has some active managed funds in it, whereas the Index variant (2055 - FDEWX) has an ER ratio of 0.15% and is more comparable to the Vanguard offering (actually 0.01% less expensive if you want to be picky).

I left a prior job with a 401k and rolled it into a traditional IRA at Fidelity which was easy. But you could do that at Vanguard too. Often just depends if you want accounts scattered around or all in one place. But no "real" advantage to one place over the other in my opinion.

bryanth

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #7 on: August 31, 2016, 05:39:46 PM »
Thanks for everyones responses. The reason I was silent was I had not yet started and was unsure of what options were available within my new plan.

The problem I have is that I would pick "Fidelity Freedom K® 2055 Fund (FDENX)," but the expense rate is +0.6%+++. That's crazy! What should I do?
   
American Funds The Growth Fund of America® Class R-6 (RGAGX)
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3.02%   3.26%   3.65%   2.80%   5.00%   0.45%   0.45%

TexasRunner

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #8 on: August 31, 2016, 06:17:48 PM »
I am in a similar position.  I had everything in Fidelity Freedom 2055 pre-MMM.  It is .6% at my employer as well (good to know that isn't changed from workplace to workplace) and it is too high.  The only reasonable index fund my employer offers is the S&P 500 so I am completely invested there for now. 

If I were you, I would capture the 401k benefits at the new job by maxing out into whichever fund has the lowest expense ratios and over time back-door it into Roth.  As per what was suggested above, keep or move the old 401k into whatever is cheapest between Roth, new 401k and old 401k.  My money is that Vanguard will win.

Then again I saw this when I logged in last week....  https://www.fidelity.com/mutual-funds/investing-ideas/index-funds.  Just price it all out.  We are young.  Feel lucky that we figured out investing and MMM at a young age.  :)

TexasRunner

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #9 on: August 31, 2016, 06:19:55 PM »
Also, what are the expense ratios for the options you posted?  Be sure that there isn't anything 'tacked' on top of the publicly displayed expense ratios.

Edit:  Duh, those aren't returns.  :p

FXAIX For The Win in the new job.  Most likely keep the old Vanguard up and running.  (Yay! Same as me!  I wonder if we work at the same company....  All our options match...)
« Last Edit: August 31, 2016, 07:22:26 PM by PriestTheRunner »

jjandjab

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #10 on: August 31, 2016, 07:12:51 PM »
I'd just put most if not all in the SP500 fund - especially if you are investing long term and with that crazy low ER 0.015%. If you wanted to make it closer to a total stock fund, you could divide up allocations between SP500, mid cap index and small cap index, since ERs for those are also quite good. If you wanted to add in some bonds (I personally do 80% stock/ 20% bonds at age 43), the Dodge and Cox Income fund is a pretty good choice with a reasonable ER... Just by doing it yourself, you will save a significant amount (probably close to 0.5% per year) on the expense ratio rather than just using the Freedom Fund

csdreaming

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #11 on: August 31, 2016, 07:15:34 PM »
Why do you want to rollover to a 401K? Why don't you just rollover to a Vanguard IRA? You have more freedom and access to the same products.

Jack

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Re: Rollover my 401k Vanguard --> Fidelity? (New Job)
« Reply #12 on: August 31, 2016, 07:42:04 PM »
Set the allocation for your new 401k to a cap-weighted blend of FXAIX, FSTPX, and FSSSX (large/mid/small cap indices). Those three funds are excellent on expenses! In fact, you'd actually do better rolling over your Vanguard 401k to Fidelity than you would rolling it over to a Vanguard IRA because of that (they're even cheaper than Vanguard Admiral funds).

Of course, that's if you're okay with with a 100% domestic equity portfolio -- which, for a mustachian in his 20s, is a perfectly good choice. But if you want international stocks (or bonds, though I wouldn't bother), that's different because your choices suck for those asset classes. In that case, you should still do the allocation I wrote above for your new 401k. But instead of rolling your existing 401k into it, you should keep it (or roll it into a Vanguard IRA, depending on expenses of course) and buy all your international and bonds there.

For example, say you want 70% domestic stock, 20% international stock and 10% bonds, and it's a couple years from now so you have 100K in your Vanguard IRA and 200K in your new Fidelity 401k. In that case, your allocation would be $30K VBTLX, $60K VTIAX and $10K VTSAX in your Vanguard IRA and 100% [cap weighted mix of Fidelity funds above] in your 401k.

(Eventually your 401k might get so much larger than your soon-to-be-IRA that the non-domestic-equity allocation might no longer fit completely in the latter, but you can cross that bridge when you come to it.)