Author Topic: Fidelity -> Vanguard rollover, have to send a check?  (Read 1006 times)

appleshampooid

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Fidelity -> Vanguard rollover, have to send a check?
« on: August 30, 2018, 06:25:43 AM »
I am rolling over my wife's 401(k) from her recently separated job to Vanguard, and was disappointed when we called them that they won't send the check directly to Vanguard. Now I've done a bunch of rollovers, and only once did I have take take physical possession of the check and send it along - that was around 2011 and was a Vanguard -> Putnam rollover (IIRC, there may have been an option for them to send it directly but I didn't know what I was doing at the time).

I found this annoying at the least. Sending the check to me really has no benefit and only drawbacks - one more leg in the mail to get lost/stolen/damaged, and now I'm on the hook for part of the responsibility.

Mostly just commiserating here as I don't expect to be able to change anything (it's already in progress). Just frustrating in today's electronic world that it has to be a check at all, and doubly so that it has to be sent to me.

Aggie1999

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #1 on: August 30, 2018, 07:12:37 AM »
Your not alone. My job's 401k offer's in-service withdraws on the after tax bucket. Same as you though they send the check to me first then I have to forward it on to the destination. Makes no sense considering the check is made out to Vanguard, etc.

DS

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #2 on: August 30, 2018, 12:54:47 PM »
Had to do this with my 401 rollover. Was out of the market for weeks. Oh well.

MustacheAndaHalf

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #3 on: August 30, 2018, 12:55:36 PM »
Be careful with the amount of the check.  They might send you 80% of your account and keep 20% for tax withholding.  If you deposit that check, which is only 80% of your account, the remaining 20% could be considered a withdrawal.  So compare the amount they send against your prior account balance, or you might be in for a big surprise on your next tax bill.

I don't follow why Fidelity is unable to do this - it sounds like a bad faith effort to keep your money.  Is the problem that you can't directly move the money out of a 401(k)?  What if you:
1) roll your wife's 401(k) at Fidelity into an IRA also at Fidelity.
2) transfer the IRA directly over to Vanguard.

That might simplify things enough to allow a transfer instead of a check, but I can't guarantee it.

appleshampooid

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #4 on: August 30, 2018, 01:23:14 PM »
Be careful with the amount of the check.  They might send you 80% of your account and keep 20% for tax withholding.  If you deposit that check, which is only 80% of your account, the remaining 20% could be considered a withdrawal.  So compare the amount they send against your prior account balance, or you might be in for a big surprise on your next tax bill.
Will absolutely double check this carefully. From reading the tax notice they sent when we initiated the rollover, the 20% withholding is only done if you do an indirect rollover, with the check made out to you directly. As long as the check is made out to your financial institution ("FBO Your Name" or "custodian of Your Name") it is considered a direct rollover - even if the check isn't sent directly. An indirect, direct rollover.

Quote
I don't follow why Fidelity is unable to do this - it sounds like a bad faith effort to keep your money.  Is the problem that you can't directly move the money out of a 401(k)?  What if you:
1) roll your wife's 401(k) at Fidelity into an IRA also at Fidelity.
2) transfer the IRA directly over to Vanguard.

That might simplify things enough to allow a transfer instead of a check, but I can't guarantee it.
I agree it seems like bad faith. I considered using the IRA as an intermediary, but only in retrospect. I have my own 401(k) at Fidelity as well, so when I eventually leave this job maybe I will look in to it. I heard Fidelity used to change a $50 fee to close an IRA, but I think that got wiped away with the recent fee reductions.

starbuck19

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #5 on: August 30, 2018, 07:49:45 PM »
FYI re: rolling your 401k into a Fidelity IRA and then to Vanguard, don't do it. I did that with a pension lump sum and now Fidelity is giving me the runaround claiming that I need to get a Medallion signature guarantee before they will let me rollover the IRA to my current employer's 401k custodian (we're talking less than $5k). I rolled over a Fidelity 401k account to my current employer's 401k earlier this year and while the process took a long time (like you said they sent the check to me and then I had to mail it in to the new 401k custodian) I didn't need any signature guarantee (and that was a much larger sum). Suffice it to say I'll be avoiding Fidelity like the plague from now on. Good luck!

chasesfish

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #6 on: August 30, 2018, 08:23:17 PM »
Why leave Fidelity though? The only reason is if you really want one of their closed, active funds that vanguard offers (Vanguard wellington fund?)  Fidelity's individual IRA accounts have some pretty sweet offerings. 

CSuzette

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #7 on: August 30, 2018, 10:31:09 PM »
Sister had same issue with 𝘍𝘪𝘥𝘦𝘭𝘪𝘵𝘺 but she worked around them.  Her 401K was rolled  to an IRA account that they had to reopen. Her pension will roll to this in a couple of months and then she will call Vanguard to get the money. Their CSRs are trained to give you a hard time when you say the word. Vanguard. One guy told her it was so much more convenient to get a check and he lived near a post office. More convenient than electronic transfer?  As soon as she figured out not to say she was moving her money to Vanguard they got a lot more cooperative. Lucky she had the closed IRA that could be reopeny

appleshampooid

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Re: Fidelity -> Vanguard rollover, have to send a check?
« Reply #8 on: August 31, 2018, 08:32:17 AM »
Why leave Fidelity though? The only reason is if you really want one of their closed, active funds that vanguard offers (Vanguard wellington fund?)  Fidelity's individual IRA accounts have some pretty sweet offerings.
#1 reason is just simplicity. I am making a big push right now to move as many things as I can to Vanguard so I can see and manage everything in one place. Already moved our EF into a MM fund, doing the rollover mentioned here now, and also transferring some of my accounts at Schwab over (one Roth rollover and one in-kind transfer of a taxable).

I know that Schwab and Fidelity both have funds with lower ERs. The new zero-ER funds at Fidelity have really launched this discussion and there are many salient points here. Tracking error, securities lending income, the actual index you track, etc. all come in to play as much or more than a few basis points of ER. Plus Vanguard's patent that allows their mutual funds to be more tax-efficient, plus both Schwab's and Fidelity's international funds don't have emerging markets but VTIAX does...lots of little stuff like that. Finally I'm a fan of Vanguard's business model where the company is owned by the fund owners. Maybe I'm idealistic, but I'll stick with them.