Why is the retirement plan making this change from Vanguard to Fidelity?
When we started the plan in 2012, Vanguard was the only investment company with low fees that would support a new plan such as ours without any assets. We are grateful to them for this. However, Vanguard does not specifically support “church” 403b plans such as our plans. Fidelity does support these plans and is able to ensure the proper tax and other paperwork is maintained to ensure distributions are tracked as housing allowances (when appropriate). As well, Fidelity has a dedicated team to provide support.
I know Vanguard provides low cost funds. What about Fidelity?
This link has the list of investments available at Fidelity. This list includes 20 index mutual funds as well as a large number of actively managed funds.
In regards to costs, Fidelity funds are well priced, and, in particular their index funds are lower cost than the fund classes that Vanguard makes available to 403b plans.
|Asset class||Vanguard fund (expense ratio)||Fidelity fund (expense ratio)|
|US equities||VTSMX (0.16%)||FSTVX (0.05%)|
|US bonds||VBMFX (0.16%)||FSITX (0.07%)|
|US inflation-linked bonds||VTIPX (0.17%)||FSIYX (0.10%)|
|International equities||VGTSX (0.19%)||FSIVX (0.12%)|
|Emerging markets equities||VEIEX (0.33%)||FPMAX (0.20%)|
|International bonds||VTIBX (0.17%)||Not available|
You should note that while Fidelity does have the Fidelity Four-in-One Index Fund (FFNOX) available for our members (with cost of 0.22%), the target year retirement funds that are available to our members are actively managed funds with expenses between 0.56% and 0.76%. We have asked Fidelity to make available their target year (Freedom) index funds (at approximately 0.16% fees) and they have responded positively.
What if I want to invest in a socially responsible fund?
Unfortunately Fidelity does not have such a fund available to us now. Therefore participants who would like to invest in the Vanguard FTSE Social Index Fund can maintain an account at Vanguard to do so. We will continue to advocate for Fidelity to make such a fund available.
What is the process for transferring my funds from Vanguard to Fidelity?
In order to transfer your funds from Vanguard to Fidelity, each person should:
- Go to this page on our website and complete item #2 to register on-line for Fidelity.
- Print and complete this form and mail it to us at: Rabbis and Cantors Retirement Plan, 115 West 30th Street, Suite 400, NY, NY 10001. We will sign it and submit it to Fidelity on your behalf.
- We strongly recommend doing a direct transfer from Vanguard to Fidelity, using this Fidelity form. Having funds made payable to you (an individual) could have major tax consequences.
How does my employer submit funds to Fidelity?
Information is available on this page on our website.