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Post by steadyeddy on Dec 5, 2021 23:10:58 GMT
Typically, Fidelity sticks you with a roundtrip violation if you buy & sell an NTF mutual fund within 30 days. And, if you accumulate 3 RT violations (first offense), they won't allow NTF fund purchases for a period of time which I believe is 90 days. Second offense has longer period of restriction.
I could not find any specific rules on Fido website - so I called them.
It turns out, the RT violation rules do NOT apply if any of your purchases in the last 30 days in a single transaction are not at least $10K.
In other words, as long as you keep your single purchases to less than $10K - you would be able to freely buy/sell NTF funds within 30 days and not incur RT violations. I am not encouraging frequent trading but it is always good to know the rules of the game.
Does anyone else have further/different insights?
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Post by yogibearbull on Dec 5, 2021 23:31:12 GMT
Trick is to do only one-way transactions and then you don't get into any troubles at Fido, Schwab, Vanguard (most strict). So, you can do as many transactions from fund A (say, an ultra-ST or ST bond fund) to funds B, C, D. Just don't go back into fund A. If necessary, have 2 funds A.1 (outflow fund for buys) and A.2 (inflow fund for sells).
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Post by steadyeddy on Dec 6, 2021 0:44:10 GMT
Trick is to do only one-way transactions and then you don't get into any troubles at Fido, Schwab, Vanguard (most strict). So, you can do as many transactions from fund A (say, an ultra-ST or ST bond fund) to funds B, C, D. Just don't go back into fund A. If necessary, have 2 funds A.1 (outflow fund for buys) and A.2 (inflow fund for sells). , even with the same fund if you don't buy more than $10K in a single transaction there is no need to find a pair of funds to go back-n-forth. |
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Post by anitya on Dec 6, 2021 2:56:03 GMT
Trick is to do only one-way transactions and then you don't get into any troubles at Fido, Schwab, Vanguard (most strict). So, you can do as many transactions from fund A (say, an ultra-ST or ST bond fund) to funds B, C, D. Just don't go back into fund A. If necessary, have 2 funds A.1 (outflow fund for buys) and A.2 (inflow fund for sells). Frequent trading violation applies if a fund purchased in the last 30 days is sold. So, I do not follow what going back into fund A got anything to do with the violation if it is the selling (not the buying) that triggers the violation. |
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Post by yogibearbull on Dec 6, 2021 3:11:56 GMT
Trick is to do only one-way transactions and then you don't get into any troubles at Fido, Schwab, Vanguard (most strict). So, you can do as many transactions from fund A (say, an ultra-ST or ST bond fund) to funds B, C, D. Just don't go back into fund A. If necessary, have 2 funds A.1 (outflow fund for buys) and A.2 (inflow fund for sells). Frequent trading violation applies if a fund purchased in the last 30 days is sold. So, I do not follow what going back into fund A got anything to do with the violation if it is the selling (not the buying) that triggers the violation. It is the round trip within 30 days. For external funds under NTF platform, there may also be transaction fees if sold within 60 (Fido)-90 (Schwab) days. As noted by steadyeddy , roundtrips under $10K are now ignored by Fido. To keep things simple, let us use Fido funds only. So, exchanging some FNSOX to FCNTX, and soon exchanging that FCNTX to FCONX should not cause issue at least the first time. |
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Post by anitya on Dec 6, 2021 9:14:02 GMT
Frequent trading violation applies if a fund purchased in the last 30 days is sold. So, I do not follow what going back into fund A got anything to do with the violation if it is the selling (not the buying) that triggers the violation. It is the round trip within 30 days. For external funds under NTF platform, there may also be transaction fees if sold within 60 (Fido)-90 (Schwab) days. As noted by steadyeddy , roundtrips under $10K are now ignored by Fido. To keep things simple, let us use Fido funds only. So, exchanging some FNSOX to FCNTX, and soon exchanging that FCNTX to FCONX should not cause issue at least the first time. First roundtrip transaction does not result in penalties. A second one results in fund level purchase block and four roundtrips across all Fidelity funds within a 12 month period results in a complex-wide block. A fund level block and complex level block applies to all accounts under the same SSN. One should read the detailed rules on Fido website and not rely on free interpretation provided here. A blurb on the relevant exchange sell you suggest - "A roundtrip is a mutual fund purchase or exchange purchase followed by a sell or exchange sell within 30 calendar days in the same fund and account. For example, if you purchased a fund on May 1, selling the fund prior to May 31 would incur a roundtrip violation. It is important to remember that share aging FIFO (First In First Out) is not considered when buy and sell transactions are evaluated for roundtrips." [Underline added.] I am aware of the $10K exception, which used to be a $1K exception. I do not try to test Fidelity's application of their own rules and also when I want to buy I want to buy and when I want out I want out, even though I do not trade often. Fidelity 401(k) accounts may subject you to more restrictive and draconian frequent trading policies and may apply to non-Fido funds as well. It is also possible those rules are not described in your 401(k) account literature but do not expect any leniency from Fido 401(k) team even if they did not disclose the rules up front. In my 401(k) account they were more heavy handed than any authoritarian government one knows. The good legacy Fido retail account customer service did not extend to the Fido 401(k) team. They restricted my 401(k) account to one sell transaction and one buy transaction per quarter. So, if I sold something and moved the proceeds to the money market fund so I have some time to decide what fund to buy, I had to wait until the next quarter for the buy because they treated moving the sale proceeds to money market as a buy. Drafting this post brought back all the bad memories I have with Fido. Once their BS rose so high (even discussing with supervisors), I had to caution them that if they do not change I will be forced to notify government regulators I have access to because of my prior work with that agency. When I encountered the same situation again I noticed they have implemented corrective measures. The moral of the story is that they can be extremely and unreasonably painful when you do not anticipate and so it is better not to test them; instead, spend your energies more fruitfully. Always read the rules on their website. |
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Post by steadyeddy on Dec 8, 2021 17:34:52 GMT
The only purpose of my OP is to make folks aware of the $10K exception..
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