Traditional to SEP transfer?

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Topic Author
Mr400meterdash
Posts: 71
Joined: Wed Dec 13, 2017 10:24 am

Traditional to SEP transfer?

Post by Mr400meterdash »

Hello all,

I have been talking with my dad and mom about vanguard for over a year now and showing them all sorts of data ( in small chunks so it is not an overload) and my dad is finally sold. He is moving everything he has from EJ to vanguard. He already has a SEP with Vanguard but is transferring a traditional and a roth. He only puts money into the SEP and he leaves the other accounts untouched as of right now.

What I am wondering is if it would be a smarter idea to merge his traditional account with his SEP.

I had called vanguard about this but the person I talked to didn't answer my questions very well so I came here instead.

A few questions:

1) If he has everything at Vanguard, can he transfer his traditional to his SEP without a fee?

2) Is there any benefit to merging the two or keeping them separate other than the fact of convenience of only having 2 accounts instead of 3?

3) I am struggling to figure out how to do a transfer between two funds at Vanguard. It looks like they only have the option to transfer money from another firm so if anyone has done this and knows how to do it, I would be greatly appreciative!


Thank you!
niceguy7376
Posts: 2831
Joined: Wed Jul 10, 2013 2:59 pm
Location: Metro ATL

Re: Traditional to SEP transfer?

Post by niceguy7376 »

I dont see any benefit of moving trad to SEP. I would just move the trad as is to vanguard and apply the Asset Allocation % across all accounts.
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damjam
Posts: 950
Joined: Thu Mar 25, 2010 7:46 am
Location: Brooklyn, NY

Re: Traditional to SEP transfer?

Post by damjam »

Mr400meterdash wrote: Thu Sep 06, 2018 9:27 am Hello all,

I have been talking with my dad and mom about vanguard for over a year now and showing them all sorts of data ( in small chunks so it is not an overload) and my dad is finally sold. He is moving everything he has from EJ to vanguard. He already has a SEP with Vanguard but is transferring a traditional and a roth. He only puts money into the SEP and he leaves the other accounts untouched as of right now.

What I am wondering is if it would be a smarter idea to merge his traditional account with his SEP.

I had called vanguard about this but the person I talked to didn't answer my questions very well so I came here instead.

A few questions:

1) If he has everything at Vanguard, can he transfer his traditional to his SEP without a fee? EJ would probably charge an outgoing fee, Vanguard does not charge a fee.

2) Is there any benefit to merging the two or keeping them separate other than the fact of convenience of only having 2 accounts instead of 3?Honestly don't know. I have the same issue of multiple accounts. SEP, traditional IRA and R/O IRA. I've chosen to keep them separate just in case there is some legal subtlety I don't understand.

3) I am struggling to figure out how to do a transfer between two funds at Vanguard. It looks like they only have the option to transfer money from another firm so if anyone has done this and knows how to do it, I would be greatly appreciative!Not exactly sure what you mean here. You and your dad can fill out paperwork provided by Vanguard to initiate a rollover of funds from EJ to Vanguard. Vanguard should be able to take it from there.


Thank you!
krow36
Posts: 2361
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Traditional to SEP transfer?

Post by krow36 »

Mr400meterdash wrote: Thu Sep 06, 2018 9:27 am
A few questions:

1) If he has everything at Vanguard, can he transfer his traditional to his SEP without a fee? I don't think that is a good idea, if it's even possible. The SEP IRA is an employment account. It is possible to make the tIRA annual contribution to the SEP IRA, but I don't see the point. Having a traditional IRA, Roth IRA and a SEP IRA is not overly complicated.

2) Is there any benefit to merging the two or keeping them separate other than the fact of convenience of only having 2 accounts instead of 3? Employer based accounts may receive more protection in lawsuits.

3) I am struggling to figure out how to do a transfer between two funds at Vanguard. It looks like they only have the option to transfer money from another firm so if anyone has done this and knows how to do it, I would be greatly appreciative! It's not clear what you are asking. Are you asking about transferring between different funds within an account at Vanguard? Or are you asking about transferring accounts between Vanguard and another financial institution? Or are you asking about transferring money to or from a bank or CU to Vanguard? We need more details on what you are asking.


Thank you!
Spirit Rider
Posts: 13918
Joined: Fri Mar 02, 2007 2:39 pm

Re: Traditional to SEP transfer?

Post by Spirit Rider »

krow36 wrote: Thu Sep 06, 2018 11:18 am The SEP IRA is an employment account.

Employer based accounts may receive more protection in lawsuits.
If you combine these two statements, you have an answer.

A SEP IRA is an employer retirement plan. The account itself can be treated much like a traditional IRA account except that it has greater asset protection.

You can rollover assets from a traditional IRA account to a SEP IRA account and all combined assets will receive the additional protections.

There is no downside to consolidating the accounts. The assets will have same exact distribution options they would have in a traditional IRA account.
krow36
Posts: 2361
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Traditional to SEP transfer?

Post by krow36 »

Spirit Rider wrote: Thu Sep 06, 2018 12:47 pm You can rollover assets from a traditional IRA account to a SEP IRA account and all combined assets will receive the additional protections.
I didn't realize that the combined assets would all get the SEP protections. Thanks for the clarification.
Topic Author
Mr400meterdash
Posts: 71
Joined: Wed Dec 13, 2017 10:24 am

Re: Traditional to SEP transfer?

Post by Mr400meterdash »

Spirit Rider wrote: Thu Sep 06, 2018 12:47 pm
krow36 wrote: Thu Sep 06, 2018 11:18 am The SEP IRA is an employment account.

Employer based accounts may receive more protection in lawsuits.
If you combine these two statements, you have an answer.

A SEP IRA is an employer retirement plan. The account itself can be treated much like a traditional IRA account except that it has greater asset protection.

You can rollover assets from a traditional IRA account to a SEP IRA account and all combined assets will receive the additional protections.

There is no downside to consolidating the accounts. The assets will have same exact distribution options they would have in a traditional IRA account.
That was very helpful! I did not know this

Thank you!
megabad
Posts: 3321
Joined: Fri Jun 01, 2018 4:00 pm

Re: Traditional to SEP transfer?

Post by megabad »

Is father still working and contributing to SEP IRA? If so, he may want to consider a Solo 401k instead of the combining accounts strategy.
Domadosolo
Posts: 82
Joined: Wed Oct 02, 2019 10:53 am

Re: Traditional to SEP transfer?

Post by Domadosolo »

Mr400meterdash wrote: Thu Sep 06, 2018 3:09 pm
Spirit Rider wrote: Thu Sep 06, 2018 12:47 pm
krow36 wrote: Thu Sep 06, 2018 11:18 am The SEP IRA is an employment account.

Employer based accounts may receive more protection in lawsuits.
If you combine these two statements, you have an answer.

A SEP IRA is an employer retirement plan. The account itself can be treated much like a traditional IRA account except that it has greater asset protection.

You can rollover assets from a traditional IRA account to a SEP IRA account and all combined assets will receive the additional protections.

There is no downside to consolidating the accounts. The assets will have same exact distribution options they would have in a traditional IRA account.
That was very helpful! I did not know this

Thank you!
Is there any financial consideration when merging an IRA with Basis, into a SEP IRA? especially wrt future Roth Conversions?
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