Roth IRA: Idle Cash
Here’s a summary of the main issue and solutions discussed:
- Main Problem: The user is unclear if their idle cash will automatically go into the auto-sweep when opening a Roth account and how to change the core position to specific money market funds.
- Solution: Fidelity accounts automatically establish a core position for processing cash transactions and holding uninvested cash, which functions like a wallet.
- Core Positions: The eligible core positions vary by account type; for example, the Fidelity brokerage account can use FCASH, SPAXX, or FZFXX.
- Changing Core Position: Users can change their core position by going to the “Accounts & Trade” tab, selecting “Account Positions,” and then clicking to change the core position.
This information should help clarify how idle cash and core positions work in a Fidelity account.
Here’s the full thread
I have a question, if I open a ROTH, does my idle cash go into the auto-sweep? I have to change the core position to SPAXX, FZFXX, FDRXX, USD, etc. in the account settings as far as I understand from searching about on your website? Just double checking before opening an account. Thanks
We appreciate you reaching out to us today with your questions. I can certainly discuss our core positions and how they work. Let’s get started!
Opening a Fidelity account automatically establishes a core position using select money market funds. This is needed for processing cash transactions and for holding uninvested cash. It’s a position in your account that essentially acts like a wallet.
Eligible core positions are determined by the account type you have. For example, the only eligible core position for the Fidelity Cash Management account is the FDIC-Insured Deposit Sweep, while the Fidelity brokerage account can have Fidelity Cash (FCASH), the Fidelity Government Money Market (SPAXX), or the Fidelity Treasury Fund (FZFXX). The Fidelity Government Cash Reserves (FDRXX) is only available as a core position for IRAs and Health Savings Accounts (HSAs).
Learn more about core positions based on account type: https://www.fidelity.com/trading/faqs-about-account#faq_about2
When you want to make a purchase, you take money from your wallet to cover the cost, and conversely, after you sell something, you put the proceeds in your wallet. So, just like a wallet, when you buy a security, cash from your core position is used to pay for the trade, and when you sell a security, the proceeds are deposited into your core position.
The core position is also used for processing checks, electronic funds transfers, wire transfers, direct deposits, authorized credit cards, and other payments if available on the account.
To view alternative core choices and make changes once logged in on Fidelity.com, please follow the steps below:
1. Expand the “Accounts & Trade” tab, then select “Account Positions”
2. Click the core position to expand and select “Change Core Position”
If you have additional questions, be sure to follow up and let us know! 🟢