Helping a friend transfer from EJ

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beetroot
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Joined: Wed Jul 06, 2016 10:26 am

Helping a friend transfer from EJ

Post by beetroot » Thu Jul 13, 2017 7:49 am

I think I have the basics right, but want to make sure I’m giving the best advice. A friend has opened a ROTH IRA at Vanguard. There is an old ROTH at EJ that needs to be transferred. I believe the correct procedure is a direct transfer. Vanguard confirmed that all but one fund could be transferred in kind, but there would be fees to liquidate the funds at their end. Is the next step to call EJ and ask if there is a fee to liquidate funds at their end? And if there is no fee, is the next step to have the funds liquidated and placed in the Money Market fund he already has in the EJ ROTH IRA to prepare to request a direct transfer? I’m assuming there will be an account closure fee as well and will remind my friend to ask about that as well. Am I on the right track and am I missing anything?

Thanks in advance!

Bovinae
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Re: Helping a friend transfer from EJ

Post by Bovinae » Thu Jul 13, 2017 8:17 am

I recently helped a relative do the same. It was a fairly high value, complicated portofolio containing individual stocks, individual bonds, and a number of mutual funds. It was difficult to even get a straight answer from EJ regarding what the fees were, but they seemed to be percentage based with some hand-waving "discounts" to some arbitrary number. Given the value of this portfolio, we saved thousands of dollars by transferring in-kind to Vanguard and liquidating everything there (and got into a much simpler portfolio of VG funds). Vanguard fees are more often fixed and generally in line with other low-cost brokers (~$7/trade for non-VG securities). You can find them here:
https://investor.vanguard.com/investing/investment-fees

Depending on the value of the assets you are selling (i.e. if your friend only owns a couple hundred dollars worth of an individual security), it may be cheaper to sell at EJ with the percentage-based fee structure, but in that case you will be saving only pennies/few dollars given the low commissions at Vanguard.

In our case, I don't think they ended up charging a closing fee, but again, very opaque and difficult to ascertain what was going on. We kinda just ran away and realized we might be out a couple hundred bucks. If you do liquidate anything at EJ, yeah I believe you can just have it go to MMF settlement account and that will be transferred over.

Nice job getting out of there. I was horrified by my single brief EJ interaction.

beetroot
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Re: Helping a friend transfer from EJ

Post by beetroot » Thu Jul 13, 2017 8:33 am

Thank you! The value is under 20K and there are 7 funds that are transferrable. The plan is to place them all in one Vanguard fund. The way I read the Vanguard fee schedules, the fee would be $35 each for "mutual funds for other companies". The Vanguard representative did confirm that there would be fees for 7 of the funds. I don't believe these fall under the $7 trade fee. There's and EJ schedule of IRA fees on-line that lists a termination or transfer fee of $95. We'll have to ask if this includes liquidation. If so and that's a necessary step it seems best to do it that way.

pkcrafter
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Re: Helping a friend transfer from EJ

Post by pkcrafter » Thu Jul 13, 2017 10:57 am

beetroot wrote:Thank you! The value is under 20K and there are 7 funds that are transferrable. The plan is to place them all in one Vanguard fund. The way I read the Vanguard fee schedules, the fee would be $35 each for "mutual funds for other companies". The Vanguard representative did confirm that there would be fees for 7 of the funds. I don't believe these fall under the $7 trade fee. There's and EJ schedule of IRA fees on-line that lists a termination or transfer fee of $95. We'll have to ask if this includes liquidation. If so and that's a necessary step it seems best to do it that way.
Yes, you've got it right on the fund closing fee and Vanguard's fee. EJ will charge a transaction fee to sell the funds. Obviously, don't transfer the fund that Vanguard won't accept.

I tried to look up the EJ transaction fee, but I can't find it listed anywhere.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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BL
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Re: Helping a friend transfer from EJ

Post by BL » Thu Jul 13, 2017 11:17 am

I believe that Vanguard can ask them to liquidate and transfer the funds in one step. That is what we did with a Roth IRA which was in one fund. No clue what EJ charges to sell off funds but that is what I would do. Yes there will be a fee to close the account as well.

beetroot
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Re: Helping a friend transfer from EJ

Post by beetroot » Thu Jul 13, 2017 5:36 pm

Thank you Bovinae, Paul and BL! I will pass it along.

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