My wife is a teacher and the school district has a 403b plan avail.
There doesn't seem to be any magic to setting up a 403,
as it appears to look like a normal account or IRA.
However, the list of participating vendors
appears to be split between
insurance companies & mutual fund companies.
We have never invested with an annuity company, just mutual funds.
Any general thoughts on this list of vendors for the 403b account
American Century Investments
Fidelity Service Co.
Great American Life Insurance Co.
Ameriprise (IDS/Amer Ex)
Kemper Investors Life
Metropolitan Life Insurance Co.
Oppenheimer Mutual Fund
After she has chosen the Fidelity option, suggest that she engage in a
little "community service" and make inquiries of the administrators,
school board, etc., as to how and why the particular choices are put
on the list. A good idea would be to find out the loads, MER's, any
other costs of those funds and circulate copies among a lot of other
teachers, hopefully everybody in the school district. Educators are
supposed to teach their students critical thinking, so it should not
be considered unusual if they apply it themselves to their own
Does anyone know if Fidelity is already fully complying with the 2012
requirement to provide exact documentation on stock purchase basis?
Well, I know they can't for very old stock purchases, which I know by
experience that they didn't keep basis records. And I know they do OK
for recent trades, at least for buying and selling an equal amount.
But what about the case where you sell a partial amount? Say you
bought 500, then another 500 shares at another price. Then sell 300
and next year sell 300, then again sell at another price the remaining
400. Do they remember the leftover crosscut trades, and not throw
their hands up in the air with the annoying excuse that they are doing
nothing due to not knowing your fifo/lifo/average preference?
It is of supreme importance to me that they just pick a consistant
method (any one!) and apply/document it. It seems a fate worse than
death for me to calculate it myself, which I have done too many times
with fidelity. Now I am gun shy and don't dare sell partial amounts -
can I do it at least for fidelity purchases only a few years old?
Reporting of stock cost basis is a requirement for tax year 2011 (except
for some dividend reinvestment programs, etc.), so they must already
have this in place.
Fidelity has been tracking cost basis for many years - it's on the
supplemental information they provide with your 1099; it's just not
reported (yet) to the IRS. They do the best job I've seen anywhere on
handling bonds (including amortization of market premium, as well as
OID); compared to that, tracking basis on stocks is relatively easy (all
you have there is return of principal, splits, etc. :-) Short answer:
yes, they keep track of which shares you sold. (By the way, average
cost is not available for stocks, except for DRPs.)
_You_ are still the one responsible for ensuring that the cost basis you
report on your 1040 is correct. The new regulations are merely added
reporting requirements on the brokerages; they do not shift
responsibility. There are situations in which the brokerage is
guaranteed to get it wrong, e.g. a wash sale where the replacement
purchase is substantially identical to the security sold, but with a
different CUSIP number. The brokerage is not to consider this a wash
sale in satisfying its reporting requirement; you are to consider this a
wash sale for tax purposes.
I believe the regulations require brokerages to use FIFO as the default.
I haven't been able to dig up Fidelity's pages for retail customers,
but here's their notice to advisers, that says all this and more:
One point mentioned there (and I'd read before at Fidelity) is that you
can change the default treatment.
I feel people do a disservice to themselves if they do not keep track of
their shares and identify which ones they are selling, because they are
forsaking the opportunity to minimize (or at least defer) taxes. The
good news here is that the regulations allow brokerages to offer a slew
of alternate default rules (e.g. highest cost first, or selecting shares
to minimize the magnitude of the gain/loss - keeping it as close as
possible to no net gain/loss). They're not mandatory, so different
brokerages may offer different choices. So if you're not going to keep
track, you may want to check with Fidelity for what method you can
establish as a default.
Rich Carreiro writes:
They can only possibly do that if the transactions were all in
the same account. Which leads to the importance of being able
to make corrections...
That doesn't seem too surprising.
I need to look carefully at how they've been handling the
basis adjustments for some securities I've got which have
had return of capital distributions. That's the sort of
thing individuals have been particularly bad at becuase
it's not always all that obvious that a dividend indeed
Plain Bread alone for e-mail, thanks. The rest gets trashed.
I don't see any reason why they couldn't do it across *Fidelity*
accounts. Agree that there's no way thy can do it if the wash
sale spans brokers. And further agree I really hope they have a
way for you to make manual adjustments so that you can just use
the numbers that show up on the 1099-B without further adjustment.
Please report back to the group on that! It would be
interesting to know if that's done right.