Close IRA within 60 days?

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AnnetteLouisan
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Close IRA within 60 days?

Post by AnnetteLouisan »

I just opened an IRA with a top brokerage and, besides them putting me in a core fund right off the bat (SPAXX) with a 0.40 ER, their disclosure document identifies SEVENTEEN possible types of fees the brokerage and their affiliates may charge me.

Naturally I‘m having cold feet and would like to know if I can close this account at no cost since it was within 60 days and I never would have opened it had I known about the 17 types of fees. Since its an IRA I assume I can’t close it without penalty, I would have to roll it over to an IRA at another brokerage.

I realize I won’t get charged ALL of those potential fees, but I am allergic to minus signs and fees and i think their fidelity is to themselves, as mine is to me, and we are at cross purposes.
Last edited by AnnetteLouisan on Sat Oct 16, 2021 5:53 pm, edited 1 time in total.
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retiredjg
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Re: Close IRA within 60 days?

Post by retiredjg »

I think you may be jumping the gun a little.

Is there any indication they will be charging you any of these fees?

If you close the IRA, what will you do with the money that is in the IRA? Have a "better" brokerage in mind?
HomeStretch
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Re: Close IRA within 60 days?

Post by HomeStretch »

Is this a self-directed Fidelity IRA? I am a long-term Fidelity customer. They are great. I don’t use wealth management or advisor-recommended active funds. They have a great variety of accounts in addition to IRAs and a 2% VISA.

I don’t believe you will do significantly better at any other major low cost brokerage (Schwab, Vanguard, etc.).

Don’t talk yourself out of making portfolio adjustments before you even get started.
Last edited by HomeStretch on Sat Oct 16, 2021 5:38 pm, edited 1 time in total.
sailaway
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Re: Close IRA within 60 days?

Post by sailaway »

So, you opened an account without reading everything and now you want to make up your own rule about take backs?

Take a deep breath. Look around for better options, then transfer your money there. Take your time. Make sure you understand what you are looking at.

For example: How much do you plan to keep in the core fund? Don't worry about a few days at a time, I wouldn't even worry too much about a few dollars left over after transactions. Can you change the core to something you like better? What would your options for core be at other brokerages (hint: mine aren't much better, but you may find some that are).
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AnnetteLouisan
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

HomeStretch wrote: Sat Oct 16, 2021 5:34 pm Is this a self-directed Fidelity IRA?
well, I thought so but it references FMT CO CUST IRA
FBO (my name)

is that a custodial IRA?
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AnnetteLouisan
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

oh maybe this disclosure doc is for ALL their account types…
mine is just a self directed IRA, I believe.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

HomeStretch wrote: Sat Oct 16, 2021 5:34 pm Is this a self-directed Fidelity IRA? I am a long-term Fidelity customer. They are great. I don’t use wealth management or advisor-recommended active funds. They have a great variety of accounts in addition to IRAs and a 2% VISA.

I don’t believe you will do significantly better at any other major low cost brokerage (Schwab, Vanguard, etc.).

Don’t talk yourself out of making portfolio adjustments before you even get started.
I think this disclosure doc is their generic for all their types of accounts. whew! I feel a bit better.
nalor511
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Re: Close IRA within 60 days?

Post by nalor511 »

AnnetteLouisan wrote: Sat Oct 16, 2021 5:45 pm
HomeStretch wrote: Sat Oct 16, 2021 5:34 pm Is this a self-directed Fidelity IRA? I am a long-term Fidelity customer. They are great. I don’t use wealth management or advisor-recommended active funds. They have a great variety of accounts in addition to IRAs and a 2% VISA.

I don’t believe you will do significantly better at any other major low cost brokerage (Schwab, Vanguard, etc.).

Don’t talk yourself out of making portfolio adjustments before you even get started.
I think this disclosure doc is their generic for all their types of accounts. whew! I feel a bit better.
You are totally fine. Buy Fidelity MF or any Vanguard ETF and there will be no fees.

Fidelity is a great place for your IRA.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

sailaway wrote: Sat Oct 16, 2021 5:35 pm So, you opened an account without reading everything and now you want to make up your own rule about take backs?

Take a deep breath. Look around for better options, then transfer your money there. Take your time. Make sure you understand what you are looking at.

For example: How much do you plan to keep in the core fund? Don't worry about a few days at a time, I wouldn't even worry too much about a few dollars left over after transactions. Can you change the core to something you like better? What would your options for core be at other brokerages (hint: mine aren't much better, but you may find some that are).
I‘m not planning to stay in the core fund. We had two choices of funds before investing. I plan to try ITOT or VOO.
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AnnetteLouisan
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

nalor511 wrote: Sat Oct 16, 2021 5:46 pm
AnnetteLouisan wrote: Sat Oct 16, 2021 5:45 pm
HomeStretch wrote: Sat Oct 16, 2021 5:34 pm Is this a self-directed Fidelity IRA? I am a long-term Fidelity customer. They are great. I don’t use wealth management or advisor-recommended active funds. They have a great variety of accounts in addition to IRAs and a 2% VISA.

I don’t believe you will do significantly better at any other major low cost brokerage (Schwab, Vanguard, etc.).

Don’t talk yourself out of making portfolio adjustments before you even get started.
I think this disclosure doc is their generic for all their types of accounts. whew! I feel a bit better.
You are totally fine. Buy Fidelity MF or any Vanguard ETF and there will be no fees.

Fidelity is a great place for your IRA.
Whew! That was awful. Thanks.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

retiredjg wrote: Sat Oct 16, 2021 5:27 pm I think you may be jumping the gun a little.

Is there any indication they will be charging you any of these fees?

If you close the IRA, what will you do with the money that is in the IRA? Have a "better" brokerage in mind?
You’re right - the disclosure was for any kind of possible account I could have. I thought - how can BHers be ok with this! I thought it was all for my little $7,000 starter IRA. 😂
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

I should have married that finance guy back in the ‚90s after all lol.

I know, NOT funny!
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retiredjg
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Re: Close IRA within 60 days?

Post by retiredjg »

Caution: the term "self directed IRA" has a specific meaning and describes an IRA that is different from a plain old IRA.

There is no indication this is anything but a plain IRA. However, I don't know what 'FMT CO CUST IRA FBO (my name)" might mean.
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AnnetteLouisan
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

retiredjg wrote: Sat Oct 16, 2021 6:01 pm Caution: the term "self directed IRA" has a specific meaning and describes an IRA that is different from a plain old IRA.

There is no indication this is anything but a plain IRA. However, I don't know what 'FMT CO CUST IRA FBO (my name)" might mean.
where would it be indicated on the statement if its self directed or not?

I‘m the one choosing the funds, definitely.
HomeStretch
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Re: Close IRA within 60 days?

Post by HomeStretch »

Consider calling Fidelity’s 800# (24/7) now to discuss just to make sure the account is what you think it is.
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AnnetteLouisan
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

HomeStretch wrote: Sat Oct 16, 2021 6:08 pm Consider calling Fidelity’s 800# (24/7) now to discuss just to make sure the account is what you think it is.
It says Fidelity Traditional IRA, Fidelity Management Trust Co-Custodian
desconhecido
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Re: Close IRA within 60 days?

Post by desconhecido »

Looks like SPAXX is a money market fund. Just some place that Fidelity parks your money until you invest it in something else. Vanguard does the same thing. When you invest, money comes out of SPAXX. When you get a dividend(from VOO, EG) that's wherre it goes. In order to withdraw cash, you probably need to move it into SPAXX first and then to someplace you can actually get your hands on it.

"FMT CO CUST IRA"

wag: Fidelity Management Company Custodian For Benefit Of YOU.

I don't understand the details of how these things work, but my understanding is that traditional IRAs held in brokerages are officially in the brokerage company's name as a custodian. It's nothing to worry about, it's just a function of the accounting rules dictated by the legislation and regulations making IRAs possible and governing how they work. One way or another, every IRA I've had over the years has been held by a custodian "for benefit of" me.
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Re: Close IRA within 60 days?

Post by retiredjg »

AnnetteLouisan wrote: Sat Oct 16, 2021 6:03 pm
retiredjg wrote: Sat Oct 16, 2021 6:01 pm Caution: the term "self directed IRA" has a specific meaning and describes an IRA that is different from a plain old IRA.

There is no indication this is anything but a plain IRA. However, I don't know what 'FMT CO CUST IRA FBO (my name)" might mean.
where would it be indicated on the statement if its self directed or not?

I‘m the one choosing the funds, definitely.
I don't now where it would be indicated, but I think it is unlikely you could open a "self directed IRA' by accident if you just went through the ordinary process to open an IRA at Fidelity.\

What I'm saying is that an ordinary IRA should not be referred to as a "self directed IRA" even though you are the one who decides what funds to buy.
HomeStretch
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Re: Close IRA within 60 days?

Post by HomeStretch »

In my online account, my accounts (opened awhile ago) are all nicknamed so I can’t see the default account name used by Fidelity.

I honestly think you should call Fidelity to ask just to be sure that you have a plain vanilla IRA that is not set up to be managed by an advisor. I have called them on a weekend night with a question here and there and had a fast good response.
Last edited by HomeStretch on Mon Jan 03, 2022 6:45 pm, edited 1 time in total.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

HomeStretch wrote: Sat Oct 16, 2021 6:29 pm In my online account, my accounts (opened awhile ago) are all nicknamed so I can’t see the default account name used by Fidelity.

I honestly think you should call Fidelity to ask just to be sure that you have a plain vanilla IRA that is not set up to be managed by an advisor. I have called them on a weekend night with a question here and there and had a fast good response.
Just called them! It‘s self directed! thanks all!!
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

retiredjg wrote: Sat Oct 16, 2021 6:23 pm
AnnetteLouisan wrote: Sat Oct 16, 2021 6:03 pm
retiredjg wrote: Sat Oct 16, 2021 6:01 pm Caution: the term "self directed IRA" has a specific meaning and describes an IRA that is different from a plain old IRA.

There is no indication this is anything but a plain IRA. However, I don't know what 'FMT CO CUST IRA FBO (my name)" might mean.
where would it be indicated on the statement if its self directed or not?

I‘m the one choosing the funds, definitely.
I don't now where it would be indicated, but I think it is unlikely you could open a "self directed IRA' by accident if you just went through the ordinary process to open an IRA at Fidelity.\

What I'm saying is that an ordinary IRA should not be referred to as a "self directed IRA" even though you are the one who decides what funds to buy.
I called them. Mine are self directed. whew!
I also asked them about the FMT Co-custodian.
It‘s not a custodial account. FMT Co is the custodian.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

sailaway wrote: Sat Oct 16, 2021 5:35 pm So, you opened an account without reading everything and now you want to make up your own rule about take backs?

Take a deep breath. Look around for better options, then transfer your money there. Take your time. Make sure you understand what you are looking at.

For example: How much do you plan to keep in the core fund? Don't worry about a few days at a time, I wouldn't even worry too much about a few dollars left over after transactions. Can you change the core to something you like better? What would your options for core be at other brokerages (hint: mine aren't much better, but you may find some that are).
turned out its all good. thanks.
Ferdinand2014
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Re: Close IRA within 60 days?

Post by Ferdinand2014 »

You can ask your core/sweep account be changed. Free is the FDIC insured cash account. SPAXX fee is currently net expenses of 0.15 not 0.4. It was reduced temporally due to low interest rates. If they hadn't the fund would have a negative yield as it invests in mostly super short term treasury bills/coupons and repurchase agreements with the U.S. government. Both the money market funds and the plain old FDIC accounts are earning essentially zero (0.0001%) so the fee is somewhat irrelevant at the moment. As you will likely only hold the money in the core account for a short while, it likely doesn't matter anyway.
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Re: Close IRA within 60 days?

Post by Katietsu »

Just a comment on terminology.

The term self directed IRA is used to refer to a special type of IRA that that can hold a variety of alternative investments normally prohibited from regular IRAs. This includes things like real estate, commodities, limited partnerships, and gold bullion.

Most people just have a standard IRA that they use to hold mutual funds, bonds, cash and ETFs. This standard IRA can be an account that you manage and pick the the investments or it can be one that a financial advisor manages for you. But even though you may be managing the investments yourself, that does not necessarily mean it is the type of account that is described as a “self directed IRA.”
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

That’s odd - the rep told me that both my accounts (my empty tIRA and my backdoor Roth IRA) are self directed. Is that a function of income and liquid net worth? I hope I didn’t become an accredited investor. omg 😂

just looked up the definition! I qualify!

gold futures here we come! just kidding.
Last edited by AnnetteLouisan on Sat Oct 16, 2021 7:44 pm, edited 2 times in total.
sailaway
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Re: Close IRA within 60 days?

Post by sailaway »

AnnetteLouisan wrote: Sat Oct 16, 2021 7:39 pm That’s odd - the rep told me that both my accounts (my empty tIRA and my backdoor Roth IRA) are self directed. Is that a function of income and liquid net worth? I hope I didn’t become an accredited investor. omg 😂
I have had customer representatives use that phrasing any time someone turns down advice, rather than in any technical way.
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

Ferdinand2014 wrote: Sat Oct 16, 2021 6:57 pm You can ask your core/sweep account be changed. Free is the FDIC insured cash account. SPAXX fee is currently net expenses of 0.15 not 0.4. It was reduced temporally due to low interest rates. If they hadn't the fund would have a negative yield as it invests in mostly super short term treasury bills/coupons and repurchase agreements with the U.S. government. Both the money market funds and the plain old FDIC accounts are earning essentially zero (0.0001%) so the fee is somewhat irrelevant at the moment. As you will likely only hold the money in the core account for a short while, it likely doesn't matter anyway.
Good! I noticed that the fee matched the return! Glad it was reduced. Thanks for the info.
nalor511
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Re: Close IRA within 60 days?

Post by nalor511 »

I'll say it again, you're fine, you will not be charged, all good
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Re: Close IRA within 60 days?

Post by ResearchMed »

Katietsu wrote: Sat Oct 16, 2021 7:01 pm Just a comment on terminology.

The term self directed IRA is used to refer to a special type of IRA that that can hold a variety of alternative investments normally prohibited from regular IRAs. This includes things like real estate, commodities, limited partnerships, and gold bullion.

Most people just have a standard IRA that they use to hold mutual funds, bonds, cash and ETFs. This standard IRA can be an account that you manage and pick the the investments or it can be one that a financial advisor manages for you. But even though you may be managing the investments yourself, that does not necessarily mean it is the type of account that is described as a “self directed IRA.”
Unfortunately, the use of "self-directed IRA" is now increasingly common for both types of "IRA accounts where the investor makes the choices": 1) the "regular IRA" at a relatively conventional brokerage firm (e.g., Fidelity) and can select from what may be almost all "stocks", mutual funds, ETFs, etc. (the last paragraph above); and 2) the specialized IRA where one can hold alternative investments as described in the middle paragraph above.

Here are examples of:

1) "regular" IRA at Merrill:
https://www.merrilledge.com/offers/reti ... lsrc=aw.ds
describing "Merrill Edge® Self‑Directed" IRA accounts.

and

2) and IRA for "alternative" investments:
https://www.theentrustgroup.com/self-di ... gK5SfD_BwE
[Note: This is NOT any type of recommendation for that second type; it's just an example that popped up from Google.]

Some years ago, there was occasional disagreement here on BH when proponents of each type were sort of talking past each other, not quite realizing that there actually were two different types of IRAs where the investor could make decisions from a variety of choices. And both could be - and were - known as "self-directed".
But those "two types of choices" are quite different.

RM
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

desconhecido wrote: Sat Oct 16, 2021 6:21 pm Looks like SPAXX is a money market fund. Just some place that Fidelity parks your money until you invest it in something else. Vanguard does the same thing. When you invest, money comes out of SPAXX. When you get a dividend(from VOO, EG) that's wherre it goes. In order to withdraw cash, you probably need to move it into SPAXX first and then to someplace you can actually get your hands on it.

"FMT CO CUST IRA"

wag: Fidelity Management Company Custodian For Benefit Of YOU.

I don't understand the details of how these things work, but my understanding is that traditional IRAs held in brokerages are officially in the brokerage company's name as a custodian. It's nothing to worry about, it's just a function of the accounting rules dictated by the legislation and regulations making IRAs possible and governing how they work. One way or another, every IRA I've had over the years has been held by a custodian "for benefit of" me.
thank you! it all worked out.
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Re: Close IRA within 60 days?

Post by Eagle33 »

AnnetteLouisan wrote: Sat Oct 16, 2021 7:39 pm That’s odd - the rep told me that both my accounts (my empty tIRA and my backdoor Roth IRA) are self directed. Is that a function of income and liquid net worth? I hope I didn’t become an accredited investor. omg 😂

just looked up the definition! I qualify!

gold futures here we come! just kidding.
FYI: There is no such account type as a "backdoor" Roth IRA - its just a Roth IRA.
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Re: Close IRA within 60 days?

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I came over from Reddit. Can you tell? 🤣
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Re: Close IRA within 60 days?

Post by AnnetteLouisan »

I stayed with my Roth IRA with Fidelity. I’m going to max it out again this year. So far I put $3500 into FSKAX and the rest is in SPAXX. I expect to put more into FSKAX.

I also opened a taxable self directed brokerage with Fidelity, getting the $100 bonus. I’m playing around with it a little getting used to the statements and all the categories. So far it’s also in SPAXX. Might do VTI or VOO and a muni fund.
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