Exchange vanguard funds from individual to joint Account

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Sketch24
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Exchange vanguard funds from individual to joint Account

Post by Sketch24 » Fri Apr 26, 2019 6:35 pm

I own shares of VTSAX in my individual account and want to use Vanguard's exchange function to transfer those shares to me and my wife's joint account in the same mutual fund. Does anyone know if this would be a taxable event? I asked vanguard and they weren't exactly clear on it.

Diligent Hands
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Re: Exchange vanguard funds from individual to joint Account

Post by Diligent Hands » Fri Apr 26, 2019 9:12 pm

I am curious too. I almost did this recently, but backed off.

What are all the ramifications from going from individual to joint account?

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Dale_G
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Re: Exchange vanguard funds from individual to joint Account

Post by Dale_G » Fri Apr 26, 2019 10:56 pm

You don't want to do an "exchange" which involves a sell and a buy. Depending on how the accounts are registered, Vanguard may not permit it anyway. A sell and buy would be a taxable event.

Instead, you want to transfer the shares from your account to the joint account. If the joint owner is a US citizen spouse there are no tax ramifications regardless of of the number of dollars involved.

I believe the transaction has to be done by mail using Vanguard forms. Surely any Vanguard rep should be able to get you the right form if you tell them you want to transfer assets from your account to a joint account,

Dale
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Dale_G
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Re: Exchange vanguard funds from individual to joint Account

Post by Dale_G » Fri Apr 26, 2019 11:01 pm

I just did a brief check on the Vanguard website. instead of transferring the assets, you can simply add your spouse to your account on-line.
Adding someone as an owner on your individual account is the process of transferring assets currently held in your individual account into a joint account in both owners' names.

You'll need to:

Select the Vanguard account to which you're adding an owner.
Provide the name, address, birth date, e-mail address, and Vanguard account number of the person you're adding.
Select the type of joint account.
Review your choices and electronically sign the request.

The new owner has 14 days to:

Log on to Vanguard.com.
Go to My Messages to get important information about the process.
Verify his/her personal information and answer relevant questions.
Review the account he/she will be added to as joint account owner.
Electronically sign to accept the request.
Volatility is my friend

Diligent Hands
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Re: Exchange vanguard funds from individual to joint Account

Post by Diligent Hands » Fri Apr 26, 2019 11:13 pm

If the equities were left in the individual account and the OP died before his wife, would these be eligible for cost basis step up when his wife inherited them?

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Dale_G
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Re: Exchange vanguard funds from individual to joint Account

Post by Dale_G » Fri Apr 26, 2019 11:21 pm

Diligent - yes.

I don't know all of the rules for joint accounts however. Others who know better may comment.

Dale
Volatility is my friend

mpnret
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Re: Exchange vanguard funds from individual to joint Account

Post by mpnret » Sat Apr 27, 2019 6:18 am

Diligent Hands wrote:
Fri Apr 26, 2019 11:13 pm
If the equities were left in the individual account and the OP died before his wife, would these be eligible for cost basis step up when his wife inherited them?
That being the case, isn't it best to have 2 individual accounts than 1 joint account? My individual stocks are in my name alone for exactly that reason.

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RickBoglehead
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Re: Exchange vanguard funds from individual to joint Account

Post by RickBoglehead » Sat Apr 27, 2019 6:32 am

You can transfer assets from an individual account to a joint account. Annually I buy Primecap in our individual accounts and transfer it to our joint accounts ($25,000 per account REGISTRATION) to get around the annual limits.

The system allows you to do this, but it's tricky. It's much easier to contact Vanguard and ask them to do it for you. It is NOT a taxable event.

If the funds are in individual accounts, you can setup beneficiaries. Vanguard does not let you have beneficiaries on a joint brokerage account, a big issue for many.

As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding.

Of course, if you don't split your holdings 50/50, and you're smart enough to figure out who is going to go first, and you don't do the transfer less than a year before death, you're golden. If you do it less than a year before death (terminal diagnosis, transfer all assets, then pass away), then the stepped up basis won't happen.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

Diligent Hands
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Re: Exchange vanguard funds from individual to joint Account

Post by Diligent Hands » Sat Apr 27, 2019 8:16 am

"As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding."

Interesting. Is there any advantage one way or the other for joint vs individual besides one less account?

mpnret
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Re: Exchange vanguard funds from individual to joint Account

Post by mpnret » Sat Apr 27, 2019 11:39 am

Diligent Hands wrote:
Sat Apr 27, 2019 8:16 am
"As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding."

Interesting. Is there any advantage one way or the other for joint vs individual besides one less account?
Post right above yours pretty much spells it out. I guess years ago when I decided to keep my individual stocks in my name only it was more for my slightly older age than my wife and the fact that women statistically live longer. Kind of gambling on me going first. Instructions in my "I'm gone" document tell my wife that due to the stepped up cost basis it would be a good time to dump the individual stocks and buy a fund.

dbr
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Re: Exchange vanguard funds from individual to joint Account

Post by dbr » Sat Apr 27, 2019 11:44 am

Diligent Hands wrote:
Sat Apr 27, 2019 8:16 am
"As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding."

Interesting. Is there any advantage one way or the other for joint vs individual besides one less account?
Possibly a very small concern but upon death of one individual the survivor does not have to mess around with anything to continue to have ownership of and access to their own individual account. That could apply to holding credit cards as well.

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Sketch24
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Re: Exchange vanguard funds from individual to joint Account

Post by Sketch24 » Sat Apr 27, 2019 1:22 pm

Dale_G wrote:
Fri Apr 26, 2019 11:01 pm
I just did a brief check on the Vanguard website. instead of transferring the assets, you can simply add your spouse to your account on-line.
Adding someone as an owner on your individual account is the process of transferring assets currently held in your individual account into a joint account in both owners' names.

You'll need to:

Select the Vanguard account to which you're adding an owner.
Provide the name, address, birth date, e-mail address, and Vanguard account number of the person you're adding.
Select the type of joint account.
Review your choices and electronically sign the request.

The new owner has 14 days to:

Log on to Vanguard.com.
Go to My Messages to get important information about the process.
Verify his/her personal information and answer relevant questions.
Review the account he/she will be added to as joint account owner.
Electronically sign to accept the request.

Thank you for taking the time. The issue is that I don't want to transfer all of my assets into the joint account. Me and my wife have worked out our finances to where the money we had before we were married just stays in our individual accounts and the money we earned and accumulated after goes into our joint accounts. It is just easier for us that way even if legal implications are different. The issue is that we have been saving our son's money (who is a toddler now) from various family contributions and our own contributions in VTSAX in my account and do not want to open a custodial account because we feel that we don't want him to have access to that much money all at once when he turns 18. We felt the best way for us to account for that money and add more diversified assets like bond funds as he gets older is to open up a joint account for him (joint rather than just another new individual account due to relationship reasons rather than financial). You're right though. I haven't gotten clear answer on how to do it the couple time I asked Vanguard, but I should keep asking. Thanks for the help.

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Sketch24
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Re: Exchange vanguard funds from individual to joint Account

Post by Sketch24 » Sat Apr 27, 2019 1:25 pm

RickBoglehead wrote:
Sat Apr 27, 2019 6:32 am
You can transfer assets from an individual account to a joint account. Annually I buy Primecap in our individual accounts and transfer it to our joint accounts ($25,000 per account REGISTRATION) to get around the annual limits.

The system allows you to do this, but it's tricky. It's much easier to contact Vanguard and ask them to do it for you. It is NOT a taxable event.

If the funds are in individual accounts, you can setup beneficiaries. Vanguard does not let you have beneficiaries on a joint brokerage account, a big issue for many.

As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding.

Of course, if you don't split your holdings 50/50, and you're smart enough to figure out who is going to go first, and you don't do the transfer less than a year before death, you're golden. If you do it less than a year before death (terminal diagnosis, transfer all assets, then pass away), then the stepped up basis won't happen.
Thanks. I've asked vanguard a couple times but was told to use the exchange function both times. It didn't sound right to me so I wanted to ask somewhere else like here. Do you know what form you used? When you called them, what department did you speak to? Thanks again.

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RickBoglehead
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Re: Exchange vanguard funds from individual to joint Account

Post by RickBoglehead » Sat Apr 27, 2019 6:26 pm

Sketch24 wrote:
Sat Apr 27, 2019 1:25 pm
RickBoglehead wrote:
Sat Apr 27, 2019 6:32 am
You can transfer assets from an individual account to a joint account. Annually I buy Primecap in our individual accounts and transfer it to our joint accounts ($25,000 per account REGISTRATION) to get around the annual limits.

The system allows you to do this, but it's tricky. It's much easier to contact Vanguard and ask them to do it for you. It is NOT a taxable event.

If the funds are in individual accounts, you can setup beneficiaries. Vanguard does not let you have beneficiaries on a joint brokerage account, a big issue for many.

As to having an individual account for stepped up basis on death, that's not a valid reason. The joint assets would be stepped up on a 50/50 ratio, i.e. 1/2 of each holding.

Of course, if you don't split your holdings 50/50, and you're smart enough to figure out who is going to go first, and you don't do the transfer less than a year before death, you're golden. If you do it less than a year before death (terminal diagnosis, transfer all assets, then pass away), then the stepped up basis won't happen.
Thanks. I've asked vanguard a couple times but was told to use the exchange function both times. It didn't sound right to me so I wanted to ask somewhere else like here. Do you know what form you used? When you called them, what department did you speak to? Thanks again.
I did not use a form. I did an exchange online from one individual account to the joint, but it would not let me do the second one. My Flagship rep did it. It says Transfer on the transaction, but as I recall I did an exchange.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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