$1,000,000 In An Ally Savings Account?
$1,000,000 In An Ally Savings Account?
Hi all,
Preparing for a large, 7-figure tax bill next year. I'm making estimated payments quarterly based on safe harbor, but I'm trying to figure out what to do with the money until April 15 2022.
I was planning on putting it into an Ally account for a year. It's not much, but it's .5% interest. I suppose I could look into other short-term options as well, like a Goldman Sachs Marcus CD.
I was curious what the Bogleheads response to this should be. Should I be concerned with FDIC insurance limits? Is there really any chance Ally goes insolvent? Should I do CDARS? Something else?
Or should I just pay it now and say screw the .5%?
WWJD - What would Jack do?
Preparing for a large, 7-figure tax bill next year. I'm making estimated payments quarterly based on safe harbor, but I'm trying to figure out what to do with the money until April 15 2022.
I was planning on putting it into an Ally account for a year. It's not much, but it's .5% interest. I suppose I could look into other short-term options as well, like a Goldman Sachs Marcus CD.
I was curious what the Bogleheads response to this should be. Should I be concerned with FDIC insurance limits? Is there really any chance Ally goes insolvent? Should I do CDARS? Something else?
Or should I just pay it now and say screw the .5%?
WWJD - What would Jack do?
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Re: $1,000,000 In An Ally Savings Account?
Depends how you define real. There's an infitessimal chance, but its still possible. I wouldn't risk $750,000 myself. But, there are ways to keep more than $250,000 and still be insured such as a POD account.
Re: $1,000,000 In An Ally Savings Account?
Yes, CDARs are another option. You wouldn't put the money in a savings account, fine. What would you do?Jim Baround wrote: ↑Mon Apr 19, 2021 12:29 pm Depends how you define real. There's an infitessimal chance, but its still possible. I wouldn't risk $750,000 myself. But, there are ways to keep more than $250,000 and still be insured such as a POD account.
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Re: $1,000,000 In An Ally Savings Account?
I think savings accounts are fine...I would just split the money between banks to ensure you're covered. And I would definitely do that instead of paying the bill in advance, its at least $5,000 with minimal effort and no risk. You could also take advantage of brokerage account opening bonuses. I think funds that are in the account but not invested are covered up to 500k by SIPC.
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Re: $1,000,000 In An Ally Savings Account?
I would split this between high yield accounts at Ally, Marcus, and other similar banks, in order to stay under FDIC insurance limits at each institution. Note that account co-owners or multiple beneficiaries increase insurance limits; see the FDIC site for details.
I recently faced essentially the same question (specifically for Ally bank), and decided to split the funds across banks.
My sense is that Ally's customer service and policies have been getting worse over the years, which made this an easier decision for me.
I recently faced essentially the same question (specifically for Ally bank), and decided to split the funds across banks.
My sense is that Ally's customer service and policies have been getting worse over the years, which made this an easier decision for me.
Re: $1,000,000 In An Ally Savings Account?
I had funds (well below the max insured amount) in two different banks that went belly-up. While I did not lose anything, it did take a while to receive the funds.
VTI 48%, VXUS 12%, BND 40%
Re: $1,000,000 In An Ally Savings Account?
you have to pay 1 million in taxes, but you don't have a house bank/financial advisor/tax lawyer that can find you a better place to park it then for 0.5% at Ally......... hmmmm, maybe DIY is not a good idea here
In any case, you are gaining 5k in interest (minus tax next year) for any risk you are assuming. I am all for making money, but you must have just made a ton to pay 1 mil in taxes, so why bother
In any case, you are gaining 5k in interest (minus tax next year) for any risk you are assuming. I am all for making money, but you must have just made a ton to pay 1 mil in taxes, so why bother
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Re: $1,000,000 In An Ally Savings Account?
If you are married, you can get FDIC coverage for 1 million at one bank.
Slow and steady wins the race.
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Re: $1,000,000 In An Ally Savings Account?
I think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
Re: $1,000,000 In An Ally Savings Account?
I have multiple financial advisors that I am working with, and I've asked each of them for their opinion. I am also asking this board. It turns out that both of those things can be true at the same time.deikel wrote: ↑Mon Apr 19, 2021 3:27 pm you have to pay 1 million in taxes, but you don't have a house bank/financial advisor/tax lawyer that can find you a better place to park it then for 0.5% at Ally......... hmmmm, maybe DIY is not a good idea here
In any case, you are gaining 5k in interest (minus tax next year) for any risk you are assuming. I am all for making money, but you must have just made a ton to pay 1 mil in taxes, so why bother
Not sure why this was so tough to understand, but I am asking this question specifically because I'm wondering if the risk is worth such a small yield. You just re-stated my original question.
Re: $1,000,000 In An Ally Savings Account?
No it is not. At the same bank, it is:financial.freedom wrote: ↑Mon Apr 19, 2021 4:30 pmI think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
250k, individual, spouse 1
250k, joint, spouse 1
250k, individual, spouse 2
250k, joint, spouse 2
Because the limit is per person per account type. You can do the same thing using beneficiaries instead, for the "joint" classification if you don't want to actually have a joint account.
Re: $1,000,000 In An Ally Savings Account?
Interesting, so it looks like the FDIC actually insures you more if your account beneficiary is your revocable trust: https://www.fdic.gov/deposit/covered/trust.html
I have a revocable trust listed as my beneficiary at Ally and I have 4 beneficiaries within that trust. Does that mean I have $1,000,000 in coverage?
I have a revocable trust listed as my beneficiary at Ally and I have 4 beneficiaries within that trust. Does that mean I have $1,000,000 in coverage?
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Re: $1,000,000 In An Ally Savings Account?
i think OP is referring to savings account.nalor511 wrote: ↑Mon Apr 19, 2021 4:39 pmNo it is not. At the same bank, it is:financial.freedom wrote: ↑Mon Apr 19, 2021 4:30 pmI think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
250k, individual, spouse 1
250k, joint, spouse 1
250k, individual, spouse 2
250k, joint, spouse 2
Because the limit is per person per account type. You can do the same thing using beneficiaries instead, for the "joint" classification if you don't want to actually have a joint account.
Re: $1,000,000 In An Ally Savings Account?
Credit Karma Money seems to provide FDIC insurance up to $5M by spreading it across a number of underlying network banks through MVB Bank, Inc.: https://www.creditkarma.com/savings
From the app:
From the app:
The downside is a 0.20% APY.FDIC Coverage: The balance in your savings account may be moved to one or more network banks where it is eligible for FDIC insurance up to $5,000,000 once the funds arrive at a network bank. Actual insured amounts may be lower or adversely affected based on any balances you hold at a network bank.
Re: $1,000,000 In An Ally Savings Account?
Savings, checking, CD, doesn't matter. What I wrote applies to FDIC and NCUA, they do not care what the institution calls the account, just whether it's I/J and whose name is on it.financial.freedom wrote: ↑Mon Apr 19, 2021 4:49 pmi think OP is referring to savings account.nalor511 wrote: ↑Mon Apr 19, 2021 4:39 pmNo it is not. At the same bank, it is:financial.freedom wrote: ↑Mon Apr 19, 2021 4:30 pmI think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
250k, individual, spouse 1
250k, joint, spouse 1
250k, individual, spouse 2
250k, joint, spouse 2
Because the limit is per person per account type. You can do the same thing using beneficiaries instead, for the "joint" classification if you don't want to actually have a joint account.
Re: $1,000,000 In An Ally Savings Account?
A couple of "savings & loan" banks. One in the 70s and one in the 80s I believe, but I don't remember the bank names.
I also was using Netbank (remember them, they had great savings account rates) until they went under in 2007. I think that my assets transferred directly to ING. But ING suffered and were bought out by Capital One around 2012. Then I moved to Citibank which promptly closed its two local branches. So, I moved to a small local bank and have been happy ever since.
Netbank info:
https://en.wikipedia.org/wiki/NetBank
ING info:
https://www.thebalance.com/ing-direct-b ... ews-315149
VTI 48%, VXUS 12%, BND 40%
Re: $1,000,000 In An Ally Savings Account?
I listened to this podcast https://youstaywealthy.com/gary-zimmerm ... -interest/ on Max My Interest. I don't have any personal experience with this company, but it certainly sounds interesting and might work for you. You would let Max My Interest open FDIC insured accounts on your behalf and move the money into those accounts. I decided against this given that I did not have enough cash to make a difference, but I would certainly look into it if I wanted to park $1,000,000 for a year.
Re: $1,000,000 In An Ally Savings Account?
Yes, this is correct. This is discussed here.nalor511 wrote: ↑Mon Apr 19, 2021 5:03 pmSavings, checking, CD, doesn't matter. What I wrote applies to FDIC and NCUA, they do not care what the institution calls the account, just whether it's I/J and whose name is on it.financial.freedom wrote: ↑Mon Apr 19, 2021 4:49 pmi think OP is referring to savings account.nalor511 wrote: ↑Mon Apr 19, 2021 4:39 pmNo it is not. At the same bank, it is:financial.freedom wrote: ↑Mon Apr 19, 2021 4:30 pmI think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
250k, individual, spouse 1
250k, joint, spouse 1
250k, individual, spouse 2
250k, joint, spouse 2
Because the limit is per person per account type. You can do the same thing using beneficiaries instead, for the "joint" classification if you don't want to actually have a joint account.
viewtopic.php?f=1&t=327313
Slow and steady wins the race.
Re: $1,000,000 In An Ally Savings Account?
I would not, unless I had full FDIC for the money held there (250k limit pp). Last time I looked at the financials of the bank, I believe their financials were mediocre. I would find 3 other HY savings accounts to split the cash. Fortunately this can be accomplished relatively quickly only.
Re: $1,000,000 In An Ally Savings Account?
That sounds right. I did something similar to get to $600k. But, just go to the fdic website and use the calculator there. It is very thorough.FIREGuy88 wrote: ↑Mon Apr 19, 2021 4:43 pm Interesting, so it looks like the FDIC actually insures you more if your account beneficiary is your revocable trust: https://www.fdic.gov/deposit/covered/trust.html
I have a revocable trust listed as my beneficiary at Ally and I have 4 beneficiaries within that trust. Does that mean I have $1,000,000 in coverage?
Re: $1,000,000 In An Ally Savings Account?
I second this. The calculator is very helpful- I would rely on what the FDIC says rather than random opinions here with 750k potentially on the line. I also have had funds in banks that failed over the years- I never lost money because my deposits were fully insured.Katietsu wrote: ↑Mon Apr 19, 2021 5:57 pmThat sounds right. I did something similar to get to $600k. But, just go to the fdic website and use the calculator there. It is very thorough.FIREGuy88 wrote: ↑Mon Apr 19, 2021 4:43 pm Interesting, so it looks like the FDIC actually insures you more if your account beneficiary is your revocable trust: https://www.fdic.gov/deposit/covered/trust.html
I have a revocable trust listed as my beneficiary at Ally and I have 4 beneficiaries within that trust. Does that mean I have $1,000,000 in coverage?
Re: $1,000,000 In An Ally Savings Account?
Reference!
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Re: $1,000,000 In An Ally Savings Account?
I personally would sell very very far out puts on SPY - think 30% below today's price, for 1 year out when you need the money.FIREGuy88 wrote: ↑Mon Apr 19, 2021 12:27 pm Hi all,
Preparing for a large, 7-figure tax bill next year. I'm making estimated payments quarterly based on safe harbor, but I'm trying to figure out what to do with the money until April 15 2022.
I was planning on putting it into an Ally account for a year. It's not much, but it's .5% interest. I suppose I could look into other short-term options as well, like a Goldman Sachs Marcus CD.
I was curious what the Bogleheads response to this should be. Should I be concerned with FDIC insurance limits? Is there really any chance Ally goes insolvent? Should I do CDARS? Something else?
Or should I just pay it now and say screw the .5%?
WWJD - What would Jack do?
Probably will give you around 5-8% return from premium. Worst case scenario, spy drops 50 percent and you buy it at a 30% discount and then go on a payment plan with the IRS. In the long term if i could buy spy at 30% off, then that's not a bad worst case.
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Re: $1,000,000 In An Ally Savings Account?
I meant by 0.5% in OP first post looks like savings acct. So could only do one savings acct at Ally for 500k with co-owner. Would need another account for the second 500k ASFAIKnalor511 wrote: ↑Mon Apr 19, 2021 5:03 pmSavings, checking, CD, doesn't matter. What I wrote applies to FDIC and NCUA, they do not care what the institution calls the account, just whether it's I/J and whose name is on it.financial.freedom wrote: ↑Mon Apr 19, 2021 4:49 pmi think OP is referring to savings account.nalor511 wrote: ↑Mon Apr 19, 2021 4:39 pmNo it is not. At the same bank, it is:financial.freedom wrote: ↑Mon Apr 19, 2021 4:30 pmI think it's 250k per co-owner? maybe someone else can verify.
assuming that's the case (and you have spouse/co-owner on the acct) -- i'd do 500k Ally and 500k at another FDIC bank.
customer service w Ally is okay, no better or worse than other banks we use.
250k, individual, spouse 1
250k, joint, spouse 1
250k, individual, spouse 2
250k, joint, spouse 2
Because the limit is per person per account type. You can do the same thing using beneficiaries instead, for the "joint" classification if you don't want to actually have a joint account.
Re: $1,000,000 In An Ally Savings Account?
I removed an off-topic post. As a reminder, see: General Etiquette
At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
Re: $1,000,000 In An Ally Savings Account?
Did this a year ago with $1 million. Married with four CDs, two at Marcus two at Ally — all with full FDIC coverage. Online registration and funding was straightforward.
CDAR is another option, as are online savings accounts. American Express Bank also has a easy to use online savings account.
It doesn’t happen often, but banks do fail.
CDAR is another option, as are online savings accounts. American Express Bank also has a easy to use online savings account.
It doesn’t happen often, but banks do fail.
Re: $1,000,000 In An Ally Savings Account?
If you have enough income to owe $1M in taxes, why not just invest it as normal for higher EV? Unless you don't have the buffer to absorb a 50% drawdown.
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Re: $1,000,000 In An Ally Savings Account?
Just open 4 Ally savings accounts with 4 different POD's designated and you're done.
Plan for tomorrow, but live for today.
Re: $1,000,000 In An Ally Savings Account?
Can use 1 account with 4 beneficiaries, actually.frugalNOTcheap wrote: ↑Mon Apr 19, 2021 7:15 pm Just open 4 Ally savings accounts with 4 different POD's designated and you're done.
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Re: $1,000,000 In An Ally Savings Account?
But ... why not just buy the right treasury note and hold to maturity?
Re: $1,000,000 In An Ally Savings Account?
10 month treasuries are paying .05%traveling_salesman wrote: ↑Mon Apr 19, 2021 7:20 pm But ... why not just buy the right treasury note and hold to maturity?
10 month brokered CDs are paying .10%
Live Oak Bank is paying .6%
Re: $1,000,000 In An Ally Savings Account?
I personally would put it in a 50-50 stock bond allocation. Best case, the market zooms up and you don't kick yourself for missing an easy few hundred grand. Worst case, market drops by 50%, and you sell the bond portion, and fund the remaining difference from cash flow or other funds. Likely case, you make more than 5k that you would make at a bank over the year.
Anyway, just what I would do.
Anyway, just what I would do.
Re: $1,000,000 In An Ally Savings Account?
I'll probably just pay it all upfront next month. Thanks all for the advice!
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Re: $1,000,000 In An Ally Savings Account?
Ok. If money is what we are after, I would suggest OP take the proceeds of his sale and go just slightly longer on stocks. At least the risks are systematic rather than specific.hudson wrote: ↑Mon Apr 19, 2021 7:41 pm10 month treasuries are paying .05%traveling_salesman wrote: ↑Mon Apr 19, 2021 7:20 pm But ... why not just buy the right treasury note and hold to maturity?
10 month brokered CDs are paying .10%
Live Oak Bank is paying .6%
Re: $1,000,000 In An Ally Savings Account?
The underlying accounts are insured against those banks failing, but is Credit Karma insured if something happens to them? I was just reading up about Beam (similar model) imploding, and using one of these sites seems riskier than having the money directly with an established bank.coldhardlogic wrote: ↑Mon Apr 19, 2021 4:51 pm Credit Karma Money seems to provide FDIC insurance up to $5M by spreading it across a number of underlying network banks through MVB Bank, Inc.: https://www.creditkarma.com/savings
From the app:The downside is a 0.20% APY.FDIC Coverage: The balance in your savings account may be moved to one or more network banks where it is eligible for FDIC insurance up to $5,000,000 once the funds arrive at a network bank. Actual insured amounts may be lower or adversely affected based on any balances you hold at a network bank.
https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html
Under the arrangement, customer deposits were indeed FDIC-insured if one of the banks failed. But the federal insurance did not cover a potential failure of Beam, which is not a bank.
After complaints began surfacing online last year that customers were having trouble getting their money returned, the vendors that Beam used to process those transactions moved to cut ties with the company and the entire operation seized up.
Re: $1,000,000 In An Ally Savings Account?
The responses make no sense to me. If I asked a similar question "I have a $50k downpayment for a home due in 1 year, where should I put it?", answering with savings/CDs/treasuries makes zero sense prior to further questioning.traveling_salesman wrote: ↑Mon Apr 19, 2021 7:58 pm Ok. If money is what we are after, I would suggest OP take the proceeds of his sale and go just slightly longer on stocks. At least the risks are systematic rather than specific.
Example: If I already have $2M liquid invested, are you still gonna advise me to put it into a savings account?
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Re: $1,000,000 In An Ally Savings Account?
What would an advisor come up with that has higher return at the same risk?deikel wrote: ↑Mon Apr 19, 2021 3:27 pm you have to pay 1 million in taxes, but you don't have a house bank/financial advisor/tax lawyer that can find you a better place to park it then for 0.5% at Ally......... hmmmm, maybe DIY is not a good idea here
In any case, you are gaining 5k in interest (minus tax next year) for any risk you are assuming. I am all for making money, but you must have just made a ton to pay 1 mil in taxes, so why bother
$5k is $5k no matter how much you just made.
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Re: $1,000,000 In An Ally Savings Account?
I think that if you invest the money intended for taxes in a risky asset, you will want to make sure to sell it by the end of the year to raise cash. If it tanks next year and you sell, you won't be able to offset your original gains and still owe the same in taxes.
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Re: $1,000,000 In An Ally Savings Account?
This should help. https://edie.fdic.gov/FIREGuy88 wrote: ↑Mon Apr 19, 2021 4:43 pm Interesting, so it looks like the FDIC actually insures you more if your account beneficiary is your revocable trust: https://www.fdic.gov/deposit/covered/trust.html
I have a revocable trust listed as my beneficiary at Ally and I have 4 beneficiaries within that trust. Does that mean I have $1,000,000 in coverage?
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Re: $1,000,000 In An Ally Savings Account?
Sold some GME stocks, huh?
Re: $1,000,000 In An Ally Savings Account?
Just use Fidelity and you'll get up to 1.25M FDIC insured. One stop and done. Great interface and site functionality. No yield though...
Re: $1,000,000 In An Ally Savings Account?
This is what I would probably do with a large sum, only because I would not want to think about it a lot. But if interest rates were higher, or my net worth was a lot lower, it might be worth it to me to delay and bank the interest.
Re: $1,000,000 In An Ally Savings Account?
I think that the OP has left the building.
He said that he's going to go ahead and pay the IRS.
He started a useful discussion.
a related discussion about CDARS and non-banks that offer over 250K deposit services.
viewtopic.php?t=284278
Dink2018, I couldn't find Fidelity's over 250K services information on their website.
Re: $1,000,000 In An Ally Savings Account?
In a similar position, and am leaving the money in online savings accounts.
Re: $1,000,000 In An Ally Savings Account?
Re: $1,000,000 In An Ally Savings Account?
Thanks TdF fan!TdF fan wrote: ↑Tue Apr 20, 2021 8:04 amI'm not dink, but here is a link:
https://www.fidelity.com/why-fidelity/s ... r-accounts
So it's Fidelity's Cash Management Account?
Re: $1,000,000 In An Ally Savings Account?
It can be other accounts besides the Cash Management Account.
The following Fidelity accounts utilize the Program:
The Fidelity® Cash Management Account
Certain eligible Fidelity retirement accounts such as Traditional, Rollover, and SEP IRAs; Fidelity Roth IRAs, Fidelity SIMPLE IRAs
Fidelity Health Savings Account
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Re: $1,000,000 In An Ally Savings Account?
CDARS is the easy way to go but I don't think you'll get any yield on the accounts. The penalty is to large to close one of these CD's. if required so make sure they are structured to your cashflow payments. Your primary bank may recommend CDARS but also remember that they get a cut of the yield as a fee so they also have an interest in the product.FIREGuy88 wrote: ↑Mon Apr 19, 2021 12:27 pm Hi all,
Preparing for a large, 7-figure tax bill next year. I'm making estimated payments quarterly based on safe harbor, but I'm trying to figure out what to do with the money until April 15 2022.
I was planning on putting it into an Ally account for a year. It's not much, but it's .5% interest. I suppose I could look into other short-term options as well, like a Goldman Sachs Marcus CD.
I was curious what the Bogleheads response to this should be. Should I be concerned with FDIC insurance limits? Is there really any chance Ally goes insolvent? Should I do CDARS? Something else?
Or should I just pay it now and say screw the .5%?
WWJD - What would Jack do?
If you have the time, I'd open four on-line saving accounts. As you say above, maybe Ally and Marcus, along with Discover Bank, and another on-line bank. Probable the highest yield you'll get, with flexibility and FDIC coverage.
Re: $1,000,000 In An Ally Savings Account?
This should help explain how their accounts work. As you put in more money it automatically spreads it out to multiple banks /accounts but to you it's all the same acct. https://www.fidelity.com/cash-managemen ... t/overviewhudson wrote: ↑Tue Apr 20, 2021 6:16 amI think that the OP has left the building.
He said that he's going to go ahead and pay the IRS.
He started a useful discussion.
a related discussion about CDARS and non-banks that offer over 250K deposit services.
viewtopic.php?t=284278
Dink2018, I couldn't find Fidelity's over 250K services information on their website.