Monday, May 2, 2016

Rolling my 401k into an IRA

My long-term retirement savings have been mostly in a 401k provided by Fidelity, which was set up through my former employer. By long-term, I mean money meant to be used after I reach at least age 59-and-a-half, when 401k and IRA funds can be withdrawn without penalty. Recently I decided to take that money and roll it over into an IRA with Vanguard.
I've thought about doing a rollover for a while now, mainly to consolidate my holdings into one place. I already have a bunch of other Vanguard accounts, and this 401k is my only Fidelity account. Moving it over makes things easier for me to keep track of. As part of the move, I can also change how the money is divided across investment types. That's a nice bonus, since I was charged a trade fee when I did that within the Fidelity plan.

The reason I chose to do this now is that recently the Fidelity plan has changed to charge me a fee every quarter. It's not a lot, but any fee at all is a terrible thing when the entire point of the account is to grow money over time. Per their FAQ, Vanguard is happy to provide me a no-fee IRA account, as long as I use electronic delivery for the various documents they send out. Which I already do, for my other Vanguard accounts.

Since I already have Vanguard accounts, it was really easy to get things started. I just logged in and clicked through a few forms that explained the process. All my personal info was pulled from my existing account, so I didn't have to re-enter anything. I was able to select my new investment funds - two index funds, one for stocks and one for bonds. Each has lower fee rates than the funds I had at Fidelity. At the end of the process, I was given a letter explaining how Fidelity should make out the check used to transfer the money.

Next, I called Fidelity to let them know I wanted to perform the rollover. I couldn't do this part fully online, so I called their customer service. I was pleasantly surprised to get a person on the phone in just a few minutes. No long wait time. The representative was very helpful and even explained that I was actually getting a credit along with the fee, meaning that I wasn't losing any money from it. I appreciated that, but I decided to go ahead with the transfer anyhow, for the benefit of consolidation. To his credit, he didn't try to push me into staying with Fidelity. Once I said I was sure I wanted to go ahead, he finished up the process right away.

Then I had to wait while the check was mailed to me. Fidelity doesn't mail directly to other institutions, which is a little annoying but understandable from their perspective. Less potential for a customer to blame them for another company's mistake. When it arrived a week later, I opened it up and put my Vanguard account number on it, then mailed it to Vanguard. Less than a week later, Vanguard sent me an email confirming that they'd received the check and my rollover was complete.

All told, a fairly painless process. Both Fidelity and Vanguard did a fine job of customer service in making this an easy transaction.

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