Opinions on moving to VG

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jayars35
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Location: North Carolina

Opinions on moving to VG

Post by jayars35 » Mon Sep 18, 2017 2:04 pm

Hello group,

My wife and I have some of our investments with Vanguard. The state of NC has a 401k and 457b plan that I participated in from my first year teaching. Since I retired from the state of NC, I have been debating moving my 401k to Vanguard. Currently it is in the following funds in the state plan:

1. Total Bond Index....ER.....0.06

2. S&P 500 Index.....ER.....0.04

3. Small/Midcap Index....ER....0.05

4. Ex US Foreign Index....ER....0.10

Aside from convenience, can anyone think of any other reasons to move it to Vanguard?

Thank you

jayars35

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ruralavalon
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Re: Opinions on moving to VG

Post by ruralavalon » Mon Sep 18, 2017 2:20 pm

jayars35 wrote:
Mon Sep 18, 2017 2:04 pm
Hello group,

My wife and I have some of our investments with Vanguard. The state of NC has a 401k and 457b plan that I participated in from my first year teaching. Since I retired from the state of NC, I have been debating moving my 401k to Vanguard. Currently it is in the following funds in the state plan:

1. Total Bond Index....ER.....0.06

2. S&P 500 Index.....ER.....0.04

3. Small/Midcap Index....ER....0.05

4. Ex US Foreign Index....ER....0.10

Aside from convenience, can anyone think of any other reasons to move it to Vanguard?

Thank you

jayars35
What is your age?

When do you plan to retire?

What index is used by the international stock index fund?

Do you plan on contributing to a Roth IRA?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

jayars35
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Re: Opinions on moving to VG

Post by jayars35 » Mon Sep 18, 2017 2:50 pm

ruralavalon wrote:
Mon Sep 18, 2017 2:20 pm
jayars35 wrote:
Mon Sep 18, 2017 2:04 pm
Hello group,

My wife and I have some of our investments with Vanguard. The state of NC has a 401k and 457b plan that I participated in from my first year teaching. Since I retired from the state of NC, I have been debating moving my 401k to Vanguard. Currently it is in the following funds in the state plan:

1. Total Bond Index....ER.....0.06

2. S&P 500 Index.....ER.....0.04

3. Small/Midcap Index....ER....0.05

4. Ex US Foreign Index....ER....0.10

Aside from convenience, can anyone think of any other reasons to move it to Vanguard?

Thank you

jayars35
What is your age?.....53

When do you plan to retire?.....~10 years I hope

What index is used by the international stock index fund? MSCI all country world ex us index.

Do you plan on contributing to a Roth IRA? No. We will contribute to a traditional IRA.
Thanks

sharukh
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Re: Opinions on moving to VG

Post by sharukh » Mon Sep 18, 2017 2:54 pm

i am guessing you will be moving to vanguard ira, if you dont plan to use back door roth, then it is a good move in terms of simplicity. else its ok to leave in your plan, it has good options.

All i see is you benefit from simplicity of management, so in essence, it is ok to move.

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ruralavalon
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Re: Opinions on moving to VG

Post by ruralavalon » Mon Sep 18, 2017 3:36 pm

I think it's okay to move to a Vanguard IRA for the benefit of simplification. I don't see any additional significant benefits. I also think it's okay to leave the 401k as is.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Earl Lemongrab
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Re: Opinions on moving to VG

Post by Earl Lemongrab » Mon Sep 18, 2017 8:18 pm

Well, I wouldn't. If I were to move out of a qualified plan it would be to somewhere that would give me a cash bonus. That's not Vanguard.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

jayars35
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Re: Opinions on moving to VG

Post by jayars35 » Mon Sep 18, 2017 10:10 pm

Forgot to include this in my original post. Since I am retired, I can no longer contribute to my 401k. Also, our employer, state of NC, never contributed to our 401k's. All contributions were from our own salary.

Thanks for the responses.

jayars35

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ruralavalon
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Re: Opinions on moving to VG

Post by ruralavalon » Tue Sep 19, 2017 9:15 am

jayars35 wrote:
Mon Sep 18, 2017 10:10 pm
Forgot to include this in my original post. Since I am retired, I can no longer contribute to my 401k. Also, our employer, state of NC, never contributed to our 401k's. All contributions were from our own salary.

Thanks for the responses.

jayars35
In my opinion the fact of being retired enhances the value of simplification a bit.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

renue74
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Re: Opinions on moving to VG

Post by renue74 » Tue Sep 19, 2017 9:30 am

Move it. I was always told that once you move on from an employer, it's best to make sure your retirement accounts were also moved. You don't have as much control with the state of NC as you would with Vanguard...or any brokerage firm, for that matter.

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welderwannabe
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Re: Opinions on moving to VG

Post by welderwannabe » Tue Sep 19, 2017 9:33 am

Your expense ratios are fine, but watch out for any annual administrative fees.

My workplace plan charges a fee of .38% of AUM every year. So, while the ERs on the individual funds are pretty low, once you add in the .38% it doesn't look so good...although it is better than some.

As soon as I am given the opportunity to roll it out of there into my Fidelity solo 401k from my small side business it is heading that way.

You may want to look and see if you have any similar fees as that could factor in to any decision.
Last edited by welderwannabe on Tue Sep 19, 2017 9:34 am, edited 1 time in total.
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bloom2708
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Re: Opinions on moving to VG

Post by bloom2708 » Tue Sep 19, 2017 9:33 am

renue74 wrote:
Tue Sep 19, 2017 9:30 am
Move it. I was always told that once you move on from an employer, it's best to make sure your retirement accounts were also moved. You don't have as much control with the state of NC as you would with Vanguard...or any brokerage firm, for that matter.
+1

We have everything at Vanguard except my current 401k. Roths, Rollover IRAs for myself and spouse, taxable accounts.

When/if I leave my current employer, I will roll my 401k to Vanguard.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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Earl Lemongrab
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Re: Opinions on moving to VG

Post by Earl Lemongrab » Tue Sep 19, 2017 1:54 pm

ruralavalon wrote:
Tue Sep 19, 2017 9:15 am
In my opinion the fact of being retired enhances the value of simplification a bit.
Opposite for me. Without work taking up a large chunk of time and brainpower, that gives more time for managing other aspects of life.
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nisiprius
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Re: Opinions on moving to VG

Post by nisiprius » Tue Sep 19, 2017 2:21 pm

jayars35 wrote:
Mon Sep 18, 2017 2:04 pm
...My wife and I have some of our investments with Vanguard. The state of NC has a 401k and 457b plan that I participated in from my first year teaching. Since I retired from the state of NC, I have been debating moving my 401k to Vanguard.
I will give you a definite maybe on this.

The first is that I don't know what 401(k) plans are like these days with regard to disclosure of fees. I like to think I'm a fine-print reader, but when I was saving in a 401(k) plan I somehow completely missed some hidden fees that were being charged. At the time, the fees were hidden in the stated expense ratio for the funds. That is, for the same ticker symbol, the stated expense ratio in the plan literature was higher than the expense ratio for the same ticker symbol if you looked it up on Fidelity's website. I never thought to do this. I thought the expense ratio for FUSEX was the expense ratio for FUSEX, and I was gobsmacked when I eventually found out that it was something like 0.25% higher within the plan.

The second is that you probably get a wider range of investment choices if you move it to a rollover IRA. Irrelevant if you are happy with the choices you have.

The third reason is subtle, and others may not agree with me on this. During a career, if you have several jobs with 401(k)s and you keep your holdings in the 401(k), you acquire clutter. It's harder to manage several old 401(k)'s, track them, keep records on them, aggregate them into a single portfolio view, and so forth. Also, depending on the competence and gumption of the 401(k) provider, there may be glitches. That's more likely to happen when the plan is managed by a local advisory group than when it's being managed by a big brokerage, but still. A small business gets acquired by a medium-sized business, that runs the small business into the ground, then almost collapses itself, then gets sold to another medium-sized business... a few things like that and your 401(k) may not actually be lost but it may get misplaced.
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Jack FFR1846
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Re: Opinions on moving to VG

Post by Jack FFR1846 » Tue Sep 19, 2017 2:35 pm

To add to what nisiprius says, fees can be added at any time. If you're not watching and know where to look, you could miss them. My wife's old 401k at Fidelity, invested in Vanguard total Bond for the same ER as if it were at Vanguard was great and we left it there for 14 years. Then, one January 3rd, I looked in, doing my best hawk imitation and there it was. A brand new, shiny, never before used 0.5% management fee. Wasn't there on Christmas when I looked right at that spot. But now it was there. I immediately got her over and we did a liquidate and roll over to her Fidelity IRA and bought the Fidelity total bond MF.
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jayars35
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Re: Opinions on moving to VG

Post by jayars35 » Sun Sep 24, 2017 9:37 am

Thanks for all the responses. I appreciate you all taking the time to post thoughtful opinions. Tomorrow I will be contacting Vanguard to begin moving my and my wife's 401k's to VG as well as my 457 and her old Simple IRA.

jayars35

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ruralavalon
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Re: Opinions on moving to VG

Post by ruralavalon » Sun Sep 24, 2017 9:41 am

jayars35 wrote:
Sun Sep 24, 2017 9:37 am
Thanks for all the responses. I appreciate you all taking the time to post thoughtful opinions. Tomorrow I will be contacting Vanguard to begin moving my and my wife's 401k's to VG as well as my 457 and her old Simple IRA.

jayars35
That's a wise decision in my opinion, I value simplicity.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Minty
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Re: Opinions on moving to VG

Post by Minty » Sun Sep 24, 2017 12:11 pm

[Edited to correct error that ruralavalon noted--thanks] I was going to comment that if I had to move money today, I'd probably go to Fidelity. Fidelity's high-minimum international index fund has an ER of one basis point less than Vanguard's (FTIPX: 10 basis points; VTIAX: 11 basis points), and there is a difference, but also in favor of Fidelity, with respect to US equity index funds. These are small differences, but if an investor is moving assets anyway, why not save a sliver and get better customer service.

But when I compared the actual performance of the funds, the issue seemed more complicated. [FTIPX is a newer fund and it loses to VTIAX at 1 year and YTD.] For the domestic funds, it is very close, some periods with Fidelity ahead, others with Vanguard having a better return. It looks like Vanguard's assets for this share class are [far larger than] Fidelity's, so there may be more room for future efficiencies/ER reductions. I guess I'd still go to Fidelity; since they are in a fee war (I hope), is it not the case that betting both sides adds some diversification?

That being said, the North Carolina funds OP is in now compare very favorably to both. The NC US fund beats Fidelity at the 1, 3, and 5 year mark, and the same for Vanguard except that it loses at 1 year by 2 basis points. The NC International fund beats Vanguard at 1, 3, and 5 years, and [the newer Fidelity fund at the 1 year mark]. Given that Vanguard and Fidelity are not clearly better than the current situation, I might consider leaving it be--except that I would hate paying the $31 annual administrative fee, so I would probably move to one or the other.
Last edited by Minty on Sun Sep 24, 2017 12:35 pm, edited 1 time in total.
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ruralavalon
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Re: Opinions on moving to VG

Post by ruralavalon » Sun Sep 24, 2017 12:19 pm

Minty wrote:
Sun Sep 24, 2017 12:11 pm
I was going to comment that if I had to move money today, I'd probably go to Fidelity. Fidelity's high-minimum international index fund has an ER of 5 basis points less than Vanguard's (FSIVX: 6 basis points; VTIAX: 11 basis points), and there is a much smaller difference, but also in favor of Fidelity, with respect to US equity index funds. These are small differences, but if an investor is moving assets anyway, why not save a sliver and get better customer service.

But when I compared the actual performance of the funds, the issue seemed more complicated. FSIVX's five year annualized return is more than 50 basis points better than VTIAX, but VTIAX wins YTD, 1, and 3 year by a few basis points. For the domestic funds, it is very close, some periods with Fidelity ahead, others with Vanguard having a better return. It looks like Vanguard's assets for this share class are more than 5 times as large as Fidelity's, so there may be more room for future efficiencies/ER reductions. I guess I'd still go to Fidelity; since they are in a fee war (I hope), is it not the case that betting both sides adds some diversification?

That being said, the North Carolina funds OP is in now compare very favorably to both. The NC US fund beats Fidelity at the 1, 3, and 5 year mark, and the same for Vanguard except that it loses at 1 year by 2 basis points. The NC International fund beats Vanguard at 1, 3, and 5 years, and loses to Fidelity only at the 5 year mark. Given that Vanguard and Fidelity are not clearly better than the current situation, I might consider leaving it be--except that I would hate paying the $31 annual administrative fee, so I would probably move to one or the other.
Those two international stock index funds are not equivalent, and not are comparable.

Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11% is much more diversified. It includes stocks of both larger and smaller companies, in both emerging markets and developed markets, including Canada.

Fidelity International Stock Index Fund Premium Class (FSIVX) ER 0.06% is less diversified. It only covers stocks of larger companies, only in developed markets except Canada. It omits emerging markets, small company stocks, and Canadian stocks. In my opinion the omissions of emerging markets and Canada are both serious omissions.
Last edited by ruralavalon on Sun Sep 24, 2017 12:24 pm, edited 1 time in total.
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hogfanboy
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Re: Opinions on moving to VG

Post by hogfanboy » Sun Sep 24, 2017 12:22 pm

Money held in a 401(k) is protected by federal law from pretty much all types of creditor judgments (other than IRS tax liens and possibly, spousal or child support orders), including bankruptcy. IRAs are only protected by state law, whose shielding power varies.

jayars35
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Re: Opinions on moving to VG

Post by jayars35 » Sat Sep 30, 2017 1:43 am

Thank you all for the replies. I apologize for not responding sooner. Apparently the flu paid me a visit and I am just not getting back on my feet. The aspect of legal protection of assets has me seriously thinking of leaving my 401k money where it is.

Thank you

jayars35

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