Transferring assets to your Fidelity account sounds like a tedious task. Fortunately, Fidelity makes it easier than you would expect. But what is more important for some clients is whether or not Fidelity covers the transfer fees.
Yes, Fidelity covers transfer fees if you move your account over to them, but only if it’s worth at least $25,000 or if you already have an account with them that is worth that minimum amount. But since there are some reports over the Internet that claim they have covered transfer fees for smaller accounts, it doesn’t hurt to ask them after the transfer is completed.
In this article, we will go over all details. From what assets you can transfer to how long it takes and everything in between.
Why Won’t Fidelity Cover Transfer Fees If My Account Is Smaller than $25,000?
So, why do you need to have at least $25,000 for Fidelity to cover the transfer fees? While this may up to debate when it comes to the specific broker, there is a good explanation that makes sense when it generally comes to brokers.
You first have to understand that Fidelity is a business like any other. The two main ways that Fidelity or any other broker can make money off you is charging you commission fees and profiting from the spreads.
Since commission fees for trading stocks have gone to $0 lately, they mostly profit from the spreads. The spread is basically the difference between the bid and ask prices. The bid is the best price that the broker can provide you if you are looking to sell. And the ask is the best price that he can provide if you are looking to buy.
So, when you buy a stock for example, the broker will execute your order at the ask by buying the stock for you at the bid, which will be naturally higher. Bottom line, they benefit from the difference.
Now, the idea is that the larger the account you have, the bigger the trades you will make. The bigger your trades, the more money we could say that they make off you (from the spreads). A transfer fee is around $100 with most brokers, so when you compare the amount with what they can make from the spreads on a $25,000 account, covering the fee will not affect them much.
All in all, they won’t cover a transfer fee unless they can make it back and more from the spreads…
What If My Account Isn’t worth More than $25,000?
If your account isn’t larger than the minimum of $25,000, you can still try your luck by calling Fidelity and asking them if they will cover the transfer fee.
There have been online reports of customers who asked for a reimbursement from Fidelity even though their accounts were smaller and they got it. So it doesn’t hurt to get in touch with them and ask them.
But note that your best chance for them to make an exception and not give you the answer that I did in the intro is to do it after transferring your account to them. If you don’t want to take the risk of being left high and dry, then you can simply choose another broker who certainly covers transfer fees.
What Assets Should You Transfer to Fidelity?
An account transfer may not always be the best option for you; only consider one for assets that are:
- Part of your investment account.
- Retirement or health savings accounts, such as an IRA or an HSA.
- Liquidated annuities or CDs
On the other side, you should not transfer your assets this way if:
- It’s cash found in savings or checking accounts.
- You are holding them in a workplace savings account such as a 401(k) or a 403(b).
How Does Transferring a 401k Work?
Step 1: Set Up your New Account
First of all, open a rollover IRA if you do not already have one. Once done, you can move funds from your former employer’s plant to the new account. If there are both pre and post-tax contributions, things get more complicated. In this case, you might need to open a Roth IRA.
Step 2: Contact your Old 401(k) Provider
The next step is to begin the rollover process. To do this, you will have to contact your old 401(k) provider. They may request some additional documents such as a Letter of Acceptance (LOA) and some signatures.
Step 3: Deposit your Money Into your Fidelity Account
Either by sending it to Fidelity or depositing it yourself.
Step 4: Invest your Money
Now that’s done, you can finally put your money to work at Fidelity. It is a good idea to also personally check if your funds are invested with a strategy that aligns with your financial goals.
How Long Do Transfers to Fidelity Take?
It depends on many factors, such as the type of transfer and the firm you transfer it from. The process takes around five days if the firm accepts an electronic request. And it takes from 2 to 4 weeks if you have to mail the request.
But don’t worry; Fidelity will notify you via email once your assets are safe in your Fidelity account. You can even track the progress of your transfer with the Transfer Tracker Fidelity provides.
In conclusion, Fidelity will cover transfer fees if your account balance is more than $25,000 or you have an account with them that’s worth at least that amount.
But even if you don’t have that much money in stocks and cash, it doesn’t hurt to ask them after you open an account with them and the transfer is complete. As we already said, there have been reports that they have covered transfer fees in the past for smaller accounts, so you never know.
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‘Till the next time…
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