Transferring funds from Fidelity to Vanguard

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Transferring funds from Fidelity to Vanguard

Postby GammaPoint » Tue Aug 18, 2009 11:58 am

So my fiancee and I have money in three different international mutual funds on Fidelity (Canada-FICDX, Europe-FECAX, and Capital Appreciation-FIGRX, total value of all 3 being around $21,000, down from a cost basis of about $28,000) as well as a Roth IRA account for each one of us with a $4000 contribution to a Fidelity Freedom 2050 fund (value now at $2700 due to economy).

Lately I've been reading a lot of Boglehead-recommended books (currently reading The Boglehead Guide to Investing) and I'm becoming more aware of the impact that cost makes on the investment. When we first invested the money in the first paragraph we didn't really know what we were doing (the 3 international funds have expenses >1% and the Fidelity Freedom Fund is something like 0.82%). We've recently opened up a Vanguard account (and we plan on maxing out our IRA contributions on our new Vanguard account this year) but I've been wondering how easy or advisable it would be for us to move our money from these Fidelity funds to Vanguard. Would it be fairly simple to sell our international funds and move that money into a Vanguard Total International Index for example? Would it be a bad idea for us to sell this investment while it's so low, or does this not really matter if we're going to be putting it back into an International fund right away anyway?

Secondly, is it possible to move a ROTH IRA contribution from Fidelity to Vanguard? Like, could I move the money to a newly-opened retirement account on Vanguard, say, putting the money in a Total Market Index fund and not have it count against my current year IRA contributions? Is this an advisable thing to do?

Lastly, are there any taxes or fees that might come about by doing this that would make the whole process not worthwhile?

Thanks much :)
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Postby tfb » Tue Aug 18, 2009 12:18 pm

For taxable account, just sell and reinvest. You will have a capital loss which you may be able to deduct on your tax return. For Roth account, yes you can transfer and have it not count against your current year contribution limit. Fidelity charges $50 for closing a Roth, no fee for closing a taxable account.
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Postby camper » Tue Aug 18, 2009 12:21 pm

I recently transferred my Roth from Fidelity to Vanguard. It is very simple. The cost was $50. You can go to the site (Vanguard) and communicate via messaging or give them a call. It took a couple of weeks. I don't know if you will have to, but I had to sell my positions and put it into cash reserves prior to the transfer.
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Postby Boglenaut » Tue Aug 18, 2009 2:04 pm

camper wrote:I recently transferred my Roth from Fidelity to Vanguard. It is very simple. The cost was $50. You can go to the site (Vanguard) and communicate via messaging or give them a call. It took a couple of weeks. I don't know if you will have to, but I had to sell my positions and put it into cash reserves prior to the transfer.


Was that for a brokerage account? vs mutual fund account?
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Postby nisiprius » Tue Aug 18, 2009 3:05 pm

Unfortunately the exact details vary quite a bit depending on the registration of the account (in your case "Roth IRA"), on whether you're transferring the whole shebang or just some selected funds and assets, on whether Vanguard Brokerage Services includes your funds among those it deals in (making a "transfer in kind" possible), and... on the exact kind of Fidelity account you are transferring from:

"Fidelity - Brokerage (Account number format 123-456789 or Y12345678)"
"Fidelity - Mutual Funds (Account number format 2AC345678)"

I've been doing some transfers from Fidelity to Vanguard, money market to money market, so I've been going through this.

Your best move is to call Vanguard. They have what they call an (Eeeewwwwwwww) "transfer concierge" who's supposed to know the details. In my case, transfers have taken an annoyingly long time, and although I could enter the details online, all that did for me was produce a neatly printed barcoded set of forms that I then needed to fill out and mail in. Fidelity "brokerage" accounts are harder to deal with than mutual fund accounts.

But it's not at all difficult.
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Re: Transferring funds from Fidelity to Vanguard

Postby Default User BR » Tue Aug 18, 2009 4:02 pm

GammaPoint wrote:Secondly, is it possible to move a ROTH IRA contribution from Fidelity to Vanguard? Like, could I move the money to a newly-opened retirement account on Vanguard, say, putting the money in a Total Market Index fund and not have it count against my current year IRA contributions? Is this an advisable thing to do?

If you had a bit more assets, I'd recommend Wells Fargo. You'd be able to transfer all accounts in-kind and get free transactions with the PMA-linkage. However, if I'm reading it right you wouldn't have $25k in total, so the PMA account would have $25 a month in fees, which wouldn't be a good thing.




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Postby georgewatkins » Tue Aug 18, 2009 4:26 pm

GammaPoint,

I think the transfer is a good idea – just a couple of suggestions.

1) If you want to speed up the transfer process, I would suggest selling the international funds at Fidelity (if I understand correctly that these are in a taxable account), getting a check cut, and then investing that money in your new Vanguard account through an Electronic Funds Transfer. This could save you a week or more of transfer time.

2) For the Roth IRA’s, I would sell the Freedom Fund while at Fidelity to avoid any sales commissions. Fill out the paperwork on Vanguard.com to directly transfer the Fidelity Roth IRA, making sure that all the names/account #’s/etc. exactly match the information on your Fidelity accounts (this is what can really hold up the process). By doing the direct transfer of the IRA you won’t have to worry about any tax reporting consequences for taking an early IRA distribution and the subsequent reinvestment.

3) If these accounts are for long-term savings (retirement), make sure that both you and your fiancée are maxing out the Roth contributions before putting any more money into a taxable account. The transfer of an IRA to another financial institution doesn’t change your ability to contribute for 2009 - $5000 each for you and your fiancée.

4) As far as tax consequences, you will take a capital loss on the taxable account, which will reduce your tax burden (generally a good thing). The only reason to postpone taking this loss would be if you expect a low income year in 2009 but a significantly higher income in 2010.

5) Fees – I think the above posts are correct in that the only account closing fee at Fidelity will be $50. You will want to check with Fidelity to make sure.

Vanguard will help you with the nuts and bolts of the process but hopefully this will help you along.

-George
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Postby Phatphoeater » Tue Aug 18, 2009 4:38 pm

I transferred my sep ira from fidelity to wells fargo and incurred a $50 fee for closing the account.
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Postby camper » Tue Aug 18, 2009 8:37 pm

Boglenaut wrote:
camper wrote:I recently transferred my Roth from Fidelity to Vanguard. It is very simple. The cost was $50. You can go to the site (Vanguard) and communicate via messaging or give them a call. It took a couple of weeks. I don't know if you will have to, but I had to sell my positions and put it into cash reserves prior to the transfer.


Was that for a brokerage account? vs mutual fund account?


It was a brokerage account.
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Postby GammaPoint » Tue Aug 18, 2009 11:13 pm

Thanks for the advice everyone, I appreciate it! I'll look into the transfer of the Roth and also likely sell off the Fidelity international funds and reinvest them in Vanguard funds.
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