Fidelity to Offer Online 401(k), 403(b) Trading

Fidelity Investments is breaking new ground on the Internet.

The nation’s No. 1 fund group said Thursday that it will allow investors to switch investments in their 401(k) and 403(b) retirement plans on the World Wide Web starting in the third quarter.

It is the first time a company has offered a service that allows people to move money from one investment option to another in 401(k) plans online.

“I’m not aware of any company that offers online trading for 401(k) plans,” said David Weisman, director of money and technology strategies at Forrester Research Inc., a technology research company in Cambridge, Mass.

Charles Schwab Corp., the nation’s biggest discount brokerage firm, started offering a service this month that allows customers to trade mutual fund shares and stocks over the Internet.

The difference is Fidelity’s service will be for 401(k) plans, Weisman said. It is a benefit that a company can offer employees, as opposed to an individual investor deciding he wants to buy and trade other securities online, he said.

“This a new dynamic where employees are being empowered to manage their retirement plan online and more directly,” Weisman said.

Fidelity’s new service will only be available for people whose 401(k) and 403(b) plans are provided through the company. Fidelity provides retirement plan services to more than 4 million Americans, and about 17,000 companies and institutions.

Fidelity’s embrace of the Internet represents one of the broadest shows of confidence in the new online medium to date by leading financial service companies.