ACH transfer between retirement accounts of same type at different brokerages

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Topic Author
MAI
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Joined: Sun Jul 20, 2014 8:31 am

ACH transfer between retirement accounts of same type at different brokerages

Post by MAI » Thu Oct 10, 2019 1:54 am

In order to avoid Fidelity's trading fee (which they appear to have no interest in eliminating), I was wondering if it was possible to hold retirement shares in a Vanguard retirement account, transfer proceeds via ACH to the Fidelity account of the same type when I sell, and have it automatically recognized as a non-taxable event.

On the Fidelity side, each retirement and non-retirement account has its own routing and account number. Fidelity says that direct debits from retirement accounts are not allowed. Is this true also for Vanguard, and for brokerages in general?

The reason I don't want to just move everything to Vanguard is that I have a Fidelity Cash Management account, which is handy. AIUI Vanguard has nothing comparable. Neither Fidelity nor Vanguard has a transfer out fee, so if Fidelity ever eliminates its trading fee, I could move everything back to Fidelity to avoid the ACH transfer.

Topic Author
MAI
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Re: ACH transfer between retirement accounts of same type at different brokerages

Post by MAI » Thu Oct 10, 2019 2:43 am

Never mind. Fidelity just eliminated its trading fee (though it's not on their home page yet)! Problem solved. Sorry for the noise.

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RickBoglehead
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Re: ACH transfer between retirement accounts of same type at different brokerages

Post by RickBoglehead » Thu Oct 10, 2019 5:46 am

MAI wrote:
Thu Oct 10, 2019 1:54 am
In order to avoid Fidelity's trading fee (which they appear to have no interest in eliminating), I was wondering if it was possible to hold retirement shares in a Vanguard retirement account, transfer proceeds via ACH to the Fidelity account of the same type when I sell, and have it automatically recognized as a non-taxable event.

On the Fidelity side, each retirement and non-retirement account has its own routing and account number. Fidelity says that direct debits from retirement accounts are not allowed. Is this true also for Vanguard, and for brokerages in general?

The reason I don't want to just move everything to Vanguard is that I have a Fidelity Cash Management account, which is handy. AIUI Vanguard has nothing comparable. Neither Fidelity nor Vanguard has a transfer out fee, so if Fidelity ever eliminates its trading fee, I could move everything back to Fidelity to avoid the ACH transfer.
No, it is not possible.

You can only ACH cash, not securities. And you cannot ACH from a retirement account. You can withdraw, but you don't want to do that.

You could transfer part of an IRA from one institution to another, then sell shares, then transfer the cash back. Would take weeks.
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Topic Author
MAI
Posts: 20
Joined: Sun Jul 20, 2014 8:31 am

Re: ACH transfer between retirement accounts of same type at different brokerages

Post by MAI » Thu Oct 10, 2019 6:16 am

Thanks. What I was thinking is that when I sold, there would be slightly more cash than I needed, so I'd transfer the cash as a non-taxable event, then withdraw part of it (as a taxable event) on the Fidelity side. So that's not possible. Even if I could have, the ACH transfer would have taken about a day, forcing me to sell a day earlier, but would still have been better than the trading fee, since I only sell a relatively small amount each month to pay bills.

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