Selling mutual funds in a ROTH

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ray333
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Selling mutual funds in a ROTH

Postby ray333 » Sun Mar 19, 2017 6:28 pm

Recently moved my account to Vanguard ... American Funds transferred to Vanguard without an issue ... .7 expense ratio however and despite performing very well, I'm considering going with cheaper Vanguard Alternatives (3 fund portfolio)

Can I sell my American Funds and buy Vanguard Funds? 17000 in the account, would it be possible to sell and reinvest in Vanguard 17000 or would I have to wait until a can contribute again and only end up with 5,500 back in the account?

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rob
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Re: Selling mutual funds in a ROTH

Postby rob » Sun Mar 19, 2017 6:31 pm

You can buy & sell as you like (subject to Vanguards time locks on re-buying after a sale.. 30 or 60 day I forget).... An IRA has no tax capital gains, and there is no need to wait for further contributions.
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

livesoft
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Re: Selling mutual funds in a ROTH

Postby livesoft » Sun Mar 19, 2017 6:31 pm

Yes, you can. Try it. The money from the sale stays in the account.
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ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Sun Mar 19, 2017 6:33 pm

good to know! bonds better off in a Roth compared to my taxable brokerage?

livesoft
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Re: Selling mutual funds in a ROTH

Postby livesoft » Sun Mar 19, 2017 6:35 pm

ray333 wrote:good to know! bonds better off in a Roth compared to my taxable brokerage?

Maybe. Maybe not.
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ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Sun Mar 19, 2017 6:50 pm

if I were to then transfer a SIMPLE IRA to this Roth, should I have AF liquidate the funds (6 funds in the SIMPLE) prior to rolling over? Would I have to wait to do this since I technically transferred my Roth this year already? Not 100% on whether I can transfer multiple IRAs in the same year.

As always, thanks BH!

ved
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Re: Selling mutual funds in a ROTH

Postby ved » Sun Mar 19, 2017 7:06 pm

Yes, you can transfer the Simple IRA to Vanguard.
Just so you get used to the terminology:

Transfer - from one custodian to another (say for example, Fidelity to Vanguard). This can be done "in-kind", which means the funds are not sold in the origin custodian before transferring to the destination custodian. Some times this may not be possible if the destination custodian doesn't offer teh same fund. In which case, they liquidate (i.e., sell) that fund and transfer the cash proceeds.

Convert - from one account type to another. For example from IRA to Roth IRA. This could likely be a taxable event.

So, if you want to convert from Simple IRA to Roth - you would have to pay taxes on the converted amount, as ordinary income.

ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Sun Mar 19, 2017 8:37 pm

it's only ~6700 in the simple and I'm on track for a significant salary increase in 2018, so was thinking take the tax hit and hide the rest to grow tax free ...

so I can roll it into a Roth despite recently transferring the Roth? I was under the impression you could only "transfer" 1 IRA per calendar year ... but I'm still not 100% on how all this works.

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Duckie
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Re: Selling mutual funds in a ROTH

Postby Duckie » Sun Mar 19, 2017 9:28 pm

ray333 wrote:so I can roll it into a Roth despite recently transferring the Roth? I was under the impression you could only "transfer" 1 IRA per calendar year ... but I'm still not 100% on how all this works.

It depends on how you "transfer" from one IRA to another IRA.
  1. If you do a trustee-to-trustee transfer and never see a check you can do it as often as you want.
  2. If you do a direct rollover and you get a check that's made out to Vanguard FBO ray 333 and you forward the check to Vanguard you can do it as often as you want.
  3. If you do an indirect rollover and you get a check made out to ray333 (and 20% may have been withheld for taxes) and you write a new check to Vanguard for the total amount (including the possible missing 20%) you can only do that once every 365 days.

ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Mon Mar 20, 2017 8:23 am

My Roth at NW Mutual I believe was transferred direct (no check / American Funds transferred as is). My SIMPLE has 6 American Funds and I know they'll be a tax hit to convert ... would I need to convert to a Traditional at Vanguard and then roll that to a Roth? I messaged Vanguard directly because I didn't see a SIMPLE IRA on the transfer account scroll down menu .. probably won't hear back till tomorrow (1-2 business days)

Sounds like I might as well transfer the funds as is then sell them while under Vanguard? I spoke with American Funds last week and they said I could liquidate or have Vanguard initiate the transfer.

I don't need the money, I just thought it may be smart to roll it over and take the tax hit before it grows anymore / before I enter a higher tax bracket.

Sounds like I'm eligible to roll this over despite already technically transferring a Roth in 2017?

Thank you for your help, still working on fully understanding all the nuances that come with managing my portfolio.

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Duckie
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Re: Selling mutual funds in a ROTH

Postby Duckie » Mon Mar 20, 2017 2:13 pm

ray333 wrote:My SIMPLE has 6 American Funds and I know they'll be a tax hit to convert ... would I need to convert to a Traditional at Vanguard and then roll that to a Roth?

I'm not sure if you need to open a TIRA at Vanguard and roll the SIMPLE IRA assets there first or if you can roll/convert directly to the Roth IRA.

Sounds like I might as well transfer the funds as is then sell them while under Vanguard? I spoke with American Funds last week and they said I could liquidate or have Vanguard initiate the transfer.

Find out what it costs to sell at American Funds and then what it costs to sell at Vanguard. Choose whichever is cheaper.

I don't need the money, I just thought it may be smart to roll it over and take the tax hit before it grows anymore / before I enter a higher tax bracket.

That's sensible.

Sounds like I'm eligible to roll this over despite already technically transferring a Roth in 2017?

Since your earlier rollover was not an indirect rollover then yes, you can do it.

ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Thu Mar 23, 2017 8:09 pm

Sold my funds ... 17050 available ... does this debit/credit go into my settlement fund and then I can reinvest the 17000? it says its available to trade, I just don't know how to buy. would I "exchange" from my settlement fund ... tomorrow will be 3 business days

Alto Astral
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Re: Selling mutual funds in a ROTH

Postby Alto Astral » Thu Mar 23, 2017 9:00 pm

No, you would "Buy". Then pick settlement fund in the source dropdown. I used "Exchange" when i traded Vanguardstockindex for vanguardBondIndex. All in Roth

ray333
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Re: Selling mutual funds in a ROTH

Postby ray333 » Thu Mar 23, 2017 10:25 pm

Thanks guess it just needs to sweep into my settlement fund

Hypothetically I could put the 17000 into S and P index Admiral?


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