$1k minimum to open Vanguard Roth if already have Trad IRA?

[crowd79]

I already have a tIRA with Vanguard which I made $4500 in '12 contributions so far with $500 left over. Can I open a Roth with that amount? Otherwise will probably go to Schwab with their low $100 minimums.

Jeff

[Tom_T]

The lowest minimum Vanguard offers for an IRA is the STAR fund ($1000). It doesn't matter if you have other accounts or not.

[gradStudentInvestor]

The lowest minimum Vanguard offers for an IRA is the STAR fund ($1000). It doesn't matter if you have other accounts or not.

The Target Retirement funds also have a $1k minimum.

[bottomfisher]

I have Vanguard taxable and IRA accounts. Recently I decided to gain further REIT exposure through their Global ex-US REIT (in IRA acct) which has a $3,000 minimum. I tried just last week opening with just $1,000 with the intention of purchasing more monthly. I performed the transaction online without any issues despite the $3,000 minimum balance. So I recommend to just try it online like I did. Hope that helps

[retiredjg]

No. To open a Roth with a mutual fund, you need $1k (oops) for some funds, $3k for most. I suppose if you want to use ETFs, you could do it though.

Why not just add the $500 to the tIRA? If you go to Schwab and decide you want to bring the money back to VG later, there might be an account closing fee.

[crowd79]

No. To open a Roth with a mutual fund, you need $1 for some funds, $3k for most. I suppose if you want to use ETFs, you could do it though.

Why not just add the $500 to the tIRA? If you go to Schwab and decide you want to bring the money back to VG later, there might be an account closing fee.

Dont want to add it to the tIRA because it will not make a difference for my 2012 AGI in terms of staying in my "Savers Credit" bracket.

[Duckie]

crowd79, it may be possible to open a Roth IRA at Vanguard and contribute $500 for 2012 and another $500 for 2013. That would give you the minimum of $1000 which you could put into either the STAR fund or one of the Target Retirement funds.

[retiredjg]

crowd79, it may be possible to open a Roth IRA at Vanguard and contribute $500 for 2012 and another $500 for 2013. That would give you the minimum of $1000 which you could put into either the STAR fund or one of the Target Retirement funds.

Ohhhh, that's a good idea! (If it doesn't interfere with the saver's credit next year....)

I suspect this might have to be done by phone, rather than online. Not sure though.

[Epsilon Delta]

You could also take the $500 to a credit union or bank and open a 1 year or 13 month CD. Next year when you do your taxes you can see how much you want to add to your Roth. If it's less than $500 add it to the CD and renew for a year. If it's over $500 you'll have the $1000 needed for Vanguard STAR or Target Retirement and can rollover.

The difference in earnings on $500 over a year is not going to make a big difference over the long term

[SpringMan]

Another option would be to convert some of your tIRA to a Roth, then you would have both and you could add your $500 to the Roth.

[crowd79]

So, I was thinking about the 1 yr IRA cd you had mentioned, Eplison Delta and had a chat with an Ally Customer Care rep:

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Welcome to Ally's Live Chat. Thanks for joining us! A Customer Care Associate will be with you in a moment. You are number 1 in the queue. Thank you for waiting.

You are now chatting with 'Tamela'

Tamela: Thank you for chatting with me today. How can I help you?

Tamela: Hi, Jeff, my name is Tamela. How are you?

Jeff: Yes, just had a question about your IRA CD's. I was thinking of opening a 1 yr IRA CD. When that CD matures, and if I decide to do a rollover out to a broker (i.e. Vanguard), will I be charged a closing fee?

Tamela: We do not charge a fee to close accounts at maturity, however there may be other tax implications. You may want to speak to a tax professional in order to find what that would be, if anything.

Jeff: Oh okay, thanks. Not sure how that whole process would work, transferring the balance from Ally to Vanguard, for exampe....

Tamela: There would be paperwork that can be found online for a distribution, or we can mail that to you

Jeff: Okay, so I would have to take a distribution of the entire CD when it matures. That wouldn't entail a 10% tax penalty would it?

Jeff: Just moving the money from one account (Ally) to another. Don't understand how the whole "rollover" process would work unfortunately...

Tamela: You would determine how much we withheld to send to the IRS, Jeff.

Jeff: Okay, thanks

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I guess the chat didn't help too much in determining how a Roth rollover would work from a bank to Vanguard early next year, for example. Confused.....

[chantspel]

I think she give you the answer you were looking for on the last comment.

When you decide to close the IRA CD at ally, they will ask you what kind of distribution it is (qualified, non qualified, rollover etc). If you mark rollover, they shouldn't withhold any taxes and will mail you a check. You then have 60 days (I think) to transition the money to another qualified plan (ie, Vanguard IRA).

Hope that helps.

[crowd79]

I think she give you the answer you were looking for on the last comment.

When you decide to close the IRA CD at ally, they will ask you what kind of distribution it is (qualified, non qualified, rollover etc). If you mark rollover, they shouldn't withhold any taxes and will mail you a check. You then have 60 days (I think) to transition the money to another qualified plan (ie, Vanguard IRA).

Hope that helps.

You're right, she did. I did some more research myself and as you say, I would have 60 days to take out the money and then put it somewhere else (Vanguard, another bank, etc) before I were to get charged taxes and penalties on the withdraw of funds.

I also had a chat with a rep from Schwab discussing my situation and how to open a $500 Roth. Apparently they do not enforce the $1,000 minimum opening according to this chat:

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Welcome to Charles Schwab. A Schwab investment professional will be with you shortly. You are number 1 in the queue. Thank you for holding.

Chat InformationWelcome, my name is Casey. How may I help you today?

Jeff: Hi. I am contemplating opening a Roth IRA. I have already made $4500 in contributions to another IRA at another broker for 2012 and have $500 left over, but your accounts list a $1000 minimum for opening unless I were to have monthly contributions of $100?

Casey: Hi Jeff, happy to help.

Casey: That is correct.

Casey: Do you currently have any accounts with us?

Jeff: I am not sure If i would continue to contribute at all for 2013 here if I open an account, or split my tIRA contributions at my other broker and Roth IRA here. So would it be possible to terminate such a monthly withdrawal after 5 months?

Jeff: $100/month=$500

Jeff: no accounts

Casey: Well, the $1000 minimum isn't something we strictly enforce. So were you to make a contribution next year that would also be fine.

Jeff: as in, 2014?

Casey: Indeed!

Casey: You can fund the account when you wish ... because there is no penalty for not depositing $1000 into an account.

Jeff: So, basically I could open a Roth IRA for $500 for 2012, not contribute any more for 2013, but could resume in 2014?

Casey: That's correct.

Casey: How soon were you wanting to open an account?

Jeff: So the $1k minimum doesn't matter?

Casey: Not really... you can open the account with $0 and fund it when you wish.

Jeff: because it says everywhere $1k minimum on your website

Casey: I am 100% certain. If an account is left unfunded for 12 months they may send a letter asking if you still want the account open, but there is never a penalty or fee.

Jeff: okay, thanks, guess that is all I need to know for now.

Casey: Glad I could help. Anything else I can do tonight?

Jeff: Not now, but this is something to think about for sure, opening up a Roth here for $500, since it is allowable. Will have to wait and see how my taxes pan out for last year and then decide. Thanks

Casey: Have a great night.

Casey: Thank you for contacting Charles Schwab today. Click here to exit chat and take a brief survey.

Jeff: I will save this chat as evidence

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......So, it appears I have a couple of options to open this $500 Roth IRA.