Transferring Roth IRA from American Funds to Vanguard

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dustinpalmer1
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Transferring Roth IRA from American Funds to Vanguard

Post by dustinpalmer1 » Fri Oct 06, 2017 5:08 pm

My wife and I started investing this year and have almost maxed out each of our Roths for the year in American Funds. I just got done reading Bogleheads' Guide and realized fees are eating our retirement and want to look at transferring to Vanguard and continue doing monthly contributions there. Has anyone recently done this or know how it works?

Within our current brokerage account we have my wife's Rollover IRA, my wife's Roth IRA account, AND my Roth IRA account. Do I have to initiate a transfer for each account? I started the transfer process with Vanguard for my Roth IRA and it asks, "Do you have an option contract in your account?" I'm not sure what that is. My broker account does show up on Vanguard as an option to transfer.

Once the transfer is finalized I'm looking at doing the 3-fund portfolio with the money that was tied up with American Funds. Do I wait until the transfer is done to "sell" the American Funds to buy the $3000 minimum funds in Vanguard? This is my first post to the forum. Thanks in advance for any guidance.

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bertilak
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Re: Transferring Roth IRA from American Funds to Vanguard

Post by bertilak » Fri Oct 06, 2017 6:59 pm

I think the "option contract" question is referring to "option" as defined HERE. In short:
  • options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date.
You would know if you had any options in your account because it takes a bit of setting up to even be allowed to deal with them. So I suspect for you the answer to the question is "NO."

Wait until the IRA is fully transferred before buying or selling anything in the account.

Call Vanguard for help with the process. The process has to be followed carefully so as to not inadvertently mess things up. They will help because they want your business!
Listen very carefully. I shall say this only once. (There! I've said it.)

venkman
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Re: Transferring Roth IRA from American Funds to Vanguard

Post by venkman » Sat Oct 07, 2017 2:27 am

dustinpalmer1 wrote:
Fri Oct 06, 2017 5:08 pm
Within our current brokerage account we have my wife's Rollover IRA, my wife's Roth IRA account, AND my Roth IRA account. Do I have to initiate a transfer for each account? I started the transfer process with Vanguard for my Roth IRA and it asks, "Do you have an option contract in your account?" I'm not sure what that is. My broker account does show up on Vanguard as an option to transfer.

Once the transfer is finalized I'm looking at doing the 3-fund portfolio with the money that was tied up with American Funds. Do I wait until the transfer is done to "sell" the American Funds to buy the $3000 minimum funds in Vanguard? This is my first post to the forum. Thanks in advance for any guidance.
Each IRA account will probably need to be transferred separately. I would check with Vanguard about each of the individual American funds you're in now; there are some funds that can't be transferred to Vanguard at all, and others that you can transfer, but VG will charge a fee if you sell them. If you don't mind having that money uninvested for a week or two, it's probably easier to sell all the American funds before the transfer and start at Vanguard with everything in cash.

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BL
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Re: Transferring Roth IRA from American Funds to Vanguard

Post by BL » Sat Oct 07, 2017 6:29 am

Vanguard Brokerage doesn't charge additional fees for a purchase, sale, or exchange of any load fund offered through our program.
from
https://investor.vanguard.com/investing ... ommissions

So Class A (front-load) funds should have no cost to sell at Vanguard (ask them!)
However there are many classes of American Funds so be sure you know what you have.

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