Products July 12, 2004

Fidelity Boosts IRA Minimums Including Rollovers

December 31, 2002 (PLANSPONSOR.com) - Individual retirement account customers at Fidelity Investments - including those rolling over a balance from a company retirement plan - will now need to meet a higher balance threshold.
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The Boston investment giant announced that it was raising its minimum balances for IRAs to invest in a fund from $500 to $2,500 – in line with existing minimums in non-retirement accounts, Reuters reported. The increase applies to traditional IRAs, as well as to Roth and rollover IRAs.

New investors unable to meet the threshold immediately can contribute at least $200 per month until they reach $2,500, Fidelity said.

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Fidelity already charges a $12 annual fee for retail fund accounts with balances below $2,000. It waives the fee in certain circumstances, including for households with assets at Fidelity of at least $30,000, the company said.  

The increase won’t affect small-business or self-employed retirement savings plans, such as SEP-IRAs, Fidelity said.

Administration July 11, 2004

NC Treasurer Demanding Disclosure For Funds in State Retirement Plans

November 19, 2003 (PLANSPONSOR.com) - North Carolina's treasurer said he would insist that mutual funds and others handling the state's $58 billion in retirement money provide better disclosure of fees and place limits on trading by their employees.
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The extra disclosure requirements by Richard Moore come in addition to requirements he will make that funds provide an annual statement of charges, disclose the compensation packages of their managers, and realign their boards so that at least two-thirds of directors are independent.   All of which, Moore says, is his right as a customer to demand, according to a New York Times report.

“I, as a customer, am demanding a higher level of service,” Moore said in a Times interview.   Moore is also urging other pension fund manager to managers to adopt the latest principles.

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Among the companies that will be receiving the guidelines from Moore are:

  • Fidelity Investments
  • Putnam
  • T. Rowe Price
  • Vanguard
  • Federated
  • Oppenheimer
  • Van Kampen
  • American Funds.

Moore will be asking all companies that manage mutual funds offered in the state’s $2.3 billion employee 401(k) plan or manage any portion of North Carolina’s $56 billion pension plan to follow these principles. Funds that do not adopt the guidelines risk losing the state’s business, Moore told the Times.

Additionally, Moore will be asking fund managers to follow a requirement that the fund’s annual report disclose the shares owned by its manager, along with a record of all purchases and sales of shares by that manager in the previous 12 months.   Moore also wants fund managers to hold, for at least a year, any shares they buy in one of their company’s funds.

This in comes in response to PBHG Funds, which dismissed its co-founders last week, and could face action from regulators later this week. The ousters came following the resignation ofHarold Baxter, chairman and chief executive of Pilgrim Baxter & Associates, and Gary Pilgrim, after an internal probe focused on investments made by Pilgrim into a private investment limited partnership that, with Baxter’s knowledge, bought and sold shares in Pilgrim Baxter funds between March 2000 and December 2001.  “(The) review has brought into focus conduct that was not, in our view, consistent with the highest standards of professional behavior ,” David Bullock, who has taken over as Pilgrim Baxter chief executive, said in a statement (See  Pilgrim Baxter Founders Resign ).

Moore is no stranger to mutual fund letters.   Earlier this month, he sent a letter to the chairman of Alliance Capital Management, which manages $6.4 billion for the state pension plan, saying that North Carolina was reviewing that arrangement after the disclosure that some Alliance employees had allowed investors to trade in and out of the firm’s funds. The state expects that review to be completed by the end of this month, the letter said (See  Tar Heel State Opens Alliance Inquiry ).

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