VG Move to Brokerage Accounts and Roth Conversions

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cherijoh
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VG Move to Brokerage Accounts and Roth Conversions

Post by cherijoh »

Big John's post on this other thread got me thinking:
BigJohn wrote:VG is not forcing people to the new platform (yet??) but they clearly want to move in that direction. The only available option for on-line account creation is the new platform. An option for the old account platform is still available if you have a regulatory reason that precludes you from having a brokerage account but I think a rep has to do it for you. Since you don't have a regulatory need, I'm frankly not sure whether a VG rep will allow you to open an old style account but I doubt it.
I currently have all my accounts except for 401k consolidated at VG. I have 2 taxable accounts (regular and brokerage), 2 traditional IRA accounts (regular and brokerage), a non-brokerage Roth IRA, and a non-brokerage inherited IRA.

When I retire, I plan to do Roth conversions for the period before I start SS and need to take RMDs from my traditional IRAs. Conventional wisdom suggests opening a new Roth IRA for every conversion to make it easy to recharacterize your conversion if stocks subsequently tank or if you have converted "too much" (from a tax-planning perspective).

Does this mean that if I want to do a Roth Conversion and open a new account at VG it would need to be a Roth brokerage account? Does anyone know if Roth conversions need to be between like types (e.g., brokerage to brokerage) or can you do a conversion between a non-brokerage traditional IRA to a brokerage Roth IRA? I suppose I could run my conversions from my traditional IRA brokerage account to a new Roth brokerage account and then roll the money back into the non-brokerage account once I know I don't want to recharacterize.

Anyone have any experience with this?
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Kevin M
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by Kevin M »

Yes, I have experience with this. I had to upgrade the existing IRA to the new platform to convert into a new Roth IRA (which as you say, must be on the new platform). It was no big deal.

For this same login there also is a trust account on the old platform. I am not upgrading any trust accounts to the new platform until forced to, because it requires additional paperwork--you can't just do it online. There have been no issues with having a mix of accounts on old and new platforms.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
BigJohn
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by BigJohn »

cherijoh wrote: I had the same starting point a few months ago, here's what I learned in working with VG on this.

Does this mean that if I want to do a Roth Conversion and open a new account at VG it would need to be a Roth brokerage account?
Yes, all new accounts are brokerage accounts unless there is a regulatory reasons why you cannot have one.

Does anyone know if Roth conversions need to be between like types (e.g., brokerage to brokerage) or can you do a conversion between a non-brokerage traditional IRA to a brokerage Roth IRA?
To do and on-line transfer of shares from one account to another both accounts must be the new brokerage type. I explored other options with my rep and there was a way to do the conversion between dissimilar accounts types but only with a phone transaction. This method also seemed to require (the rep was a little fuzzy on these details) that the shares be sold, settled, cash transferred and then shares repurchased . Ultimately I decide that this was more trouble that it was worth as I really wanted on-line capability.

I suppose I could run my conversions from my traditional IRA brokerage account to a new Roth brokerage account and then roll the money back into the non-brokerage account once I know I don't want to recharacterize.
Like Kevin M, I opened a new brokerage Roth and "upgraded" my tIRA to a brokerage account. Once they were both on the same platform, I transferred shares to the Roth to do the conversion. All steps done on-line with no rep involved and no problems encountered. If I need to recharacterize, I can transfer back as needed.
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FactualFran
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by FactualFran »

BigJohn wrote: To do and on-line transfer of shares from one account to another both accounts must be the new brokerage type. I explored other options with my rep and there was a way to do the conversion between dissimilar accounts types but only with a phone transaction. This method also seemed to require (the rep was a little fuzzy on these details) that the shares be sold, settled, cash transferred and then shares repurchased . Ultimately I decide that this was more trouble that it was worth as I really wanted on-line capability.
A traditional IRA to Roth IRA conversion to a non-upgraded Vanguard Brokerage Account can be done by completing and mailing a paper form to Vanguard, not online or by phone. According to the "Convert a brokerage traditional IRA to a brokerage Roth IRA" link on Is a Roth convesion right for you? Vanguard web page:
If you have a Vanguard Brokerage traditional IRA, you can convert it using our Brokerage IRA conversion form PDF. Conversions online or by phone can only be completed if you have an upgraded Vanguard Brokerage Account or have opened a Vanguard Brokerage Account, which can hold all asset types, including Vanguard mutual funds, within the same account.
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cherijoh
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by cherijoh »

Thanks Kevin M and Big John! So it sounds like it isn't just the brokerage vs. non-brokerage, but also the platform where the account resides.
BigJohn wrote: To do and on-line transfer of shares from one account to another both accounts must be the new brokerage type. I explored other options with my rep and there was a way to do the conversion between dissimilar accounts types but only with a phone transaction. This method also seemed to require (the rep was a little fuzzy on these details) that the shares be sold, settled, cash transferred and then shares repurchased . Ultimately I decide that this was more trouble that it was worth as I really wanted on-line capability.

Kevin M wrote:Yes, I have experience with this. I had to upgrade the existing IRA to the new platform to convert into a new Roth IRA (which as you say, must be on the new platform). It was no big deal.

For this same login there also is a trust account on the old platform. I am not upgrading any trust accounts to the new platform until forced to, because it requires additional paperwork--you can't just do it online. There have been no issues with having a mix of accounts on old and new platforms.

Kevin
BigJohn
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by BigJohn »

FactualFran wrote:A traditional IRA to Roth IRA conversion to a non-upgraded Vanguard Brokerage Account can be done by completing and mailing a paper form to Vanguard, not online or by phone. According to the "Convert a brokerage traditional IRA to a brokerage Roth IRA" link on Is a Roth convesion right for you? Vanguard web page:
Thanks for the correction, I had phone vs mail confused. Apparently since I didn't want either I stopped listening after "not on-line" :beer
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TheGreyingDuke
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by TheGreyingDuke »

Kevin M wrote:For this same login there also is a trust account on the old platform. I am not upgrading any trust accounts to the new platform until forced to, because it requires additional paperwork--you can't just do it online. There have been no issues with having a mix of accounts on old and new platforms.

Kevin
Not the case in my experience, mine were converted, at my request, with a phone call. I do have voice verification so that might have made the difference.
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Kevin M
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by Kevin M »

TheGreyingDuke wrote:
Kevin M wrote:For this same login there also is a trust account on the old platform. I am not upgrading any trust accounts to the new platform until forced to, because it requires additional paperwork--you can't just do it online. There have been no issues with having a mix of accounts on old and new platforms.

Kevin
Not the case in my experience, mine were converted, at my request, with a phone call. I do have voice verification so that might have made the difference.
Interesting. All I know is that when I click the Upgrade link on the trust account, it shoots me to a Forms and literature page, with "Get the right form" at the top, and a list of forms below (some of which can be completed online, but not the "organization" forms, which I think is what you use for a trust). At that point I just decided it was too much bother, and so far I see no reason to upgrade this account unless necessary. Never bothered calling, but would do so if I wanted to proceed; thanks for the info.

Kevin
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Kevin M
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by Kevin M »

cherijoh wrote:Thanks Kevin M and Big John! So it sounds like it isn't just the brokerage vs. non-brokerage, but also the platform where the account resides.
I would say that once you're ready, just try it and see what happens. In my case when I started the conversion process online, I got an error message indicating that I could not do the conversion online unless I upgraded the traditional IRA account (honestly don't remember if it was because the existing tIRA was mutual fund only or brokerage on the old platform). It only took a day to complete the upgrade, so just give yourself an extra day to get the conversion done if you want to do it online. The entire process was super easy.

Incidentally, also did a partial recharacterization from the Roth back to the tIRA by phone after figuring out the optimal conversion amount the following April, and it was easy too.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
Topic Author
cherijoh
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by cherijoh »

Kevin M wrote:
cherijoh wrote:Thanks Kevin M and Big John! So it sounds like it isn't just the brokerage vs. non-brokerage, but also the platform where the account resides.
I would say that once you're ready, just try it and see what happens. In my case when I started the conversion process online, I got an error message indicating that I could not do the conversion online unless I upgraded the traditional IRA account (honestly don't remember if it was because the existing tIRA was mutual fund only or brokerage on the old platform). It only took a day to complete the upgrade, so just give yourself an extra day to get the conversion done if you want to do it online. The entire process was super easy.

Incidentally, also did a partial recharacterization from the Roth back to the tIRA by phone after figuring out the optimal conversion amount the following April, and it was easy too.

Kevin
Thanks!
Topic Author
cherijoh
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Re: VG Move to Brokerage Accounts and Roth Conversions

Post by cherijoh »

FactualFran wrote:
BigJohn wrote: To do and on-line transfer of shares from one account to another both accounts must be the new brokerage type. I explored other options with my rep and there was a way to do the conversion between dissimilar accounts types but only with a phone transaction. This method also seemed to require (the rep was a little fuzzy on these details) that the shares be sold, settled, cash transferred and then shares repurchased . Ultimately I decide that this was more trouble that it was worth as I really wanted on-line capability.
A traditional IRA to Roth IRA conversion to a non-upgraded Vanguard Brokerage Account can be done by completing and mailing a paper form to Vanguard, not online or by phone. According to the "Convert a brokerage traditional IRA to a brokerage Roth IRA" link on Is a Roth convesion right for you? Vanguard web page:
If you have a Vanguard Brokerage traditional IRA, you can convert it using our Brokerage IRA conversion form PDF. Conversions online or by phone can only be completed if you have an upgraded Vanguard Brokerage Account or have opened a Vanguard Brokerage Account, which can hold all asset types, including Vanguard mutual funds, within the same account.
Thanks! I definitely should have done my research first :oops:
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