transfer funds

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Topic Author
gautamsa
Posts: 33
Joined: Sun Aug 09, 2020 7:31 pm

transfer funds

Post by gautamsa »

Hello, I am planning to let go of my advisor and enter the VTSAX and maybe the VTIAX funds. However I need to have my money from my institution transferred over to Vanguard. Can my current financial advising company (its a well known one) create any hassles as I will be leaving them...as in charge me fees (besides the usual AUM and front end loads...I dont have any back end loads). I guess I want to find out whether there are any things to watch out for and make sure the company does not give me a nice parting gift (which I have no clue of) to "settle scores". If I have X number of dollars in all my funds with them will all X transfer seamlessly? I am assuming there will be some capital gains taxes to be paid ? Anything else ?
GMT-8
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Joined: Fri Mar 26, 2010 5:11 pm

Re: transfer funds

Post by GMT-8 »

You can search this forum for “transfer funds” but to make it simple — call Vanguard and have them pull the money. Don’t try to push it over. They have experts to help you.

GMT
Topic Author
gautamsa
Posts: 33
Joined: Sun Aug 09, 2020 7:31 pm

Re: transfer funds

Post by gautamsa »

GMT-8 wrote: Tue Aug 25, 2020 4:15 pm You can search this forum for “transfer funds” but to make it simple — call Vanguard and have them pull the money. Don’t try to push it over. They have experts to help you.

GMT
what do u mean "dont try to push it over''
dru808
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Location: mid pac

Re: transfer funds

Post by dru808 »

gautamsa wrote: Tue Aug 25, 2020 4:27 pm
GMT-8 wrote: Tue Aug 25, 2020 4:15 pm You can search this forum for “transfer funds” but to make it simple — call Vanguard and have them pull the money. Don’t try to push it over. They have experts to help you.

GMT
what do u mean "dont try to push it over''
Inform vanguard not the institution you’re with now.
65% US equity | 25% INTL equity | 10% US long bonds
dru808
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Re: transfer funds

Post by dru808 »

gautamsa wrote: Tue Aug 25, 2020 4:08 pm Hello, I am planning to let go of my advisor and enter the VTSAX and maybe the VTIAX funds. However I need to have my money from my institution transferred over to Vanguard. Can my current financial advising company (its a well known one) create any hassles as I will be leaving them...as in charge me fees (besides the usual AUM and front end loads...I dont have any back end loads). I guess I want to find out whether there are any things to watch out for and make sure the company does not give me a nice parting gift (which I have no clue of) to "settle scores". If I have X number of dollars in all my funds with them will all X transfer seamlessly? I am assuming there will be some capital gains taxes to be paid ? Anything else ?

They may have some close account fees. $100 ish per account in some instances.
65% US equity | 25% INTL equity | 10% US long bonds
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AlabamaPaul
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Re: transfer funds

Post by AlabamaPaul »

gautamsa wrote: Tue Aug 25, 2020 4:27 pm
GMT-8 wrote: Tue Aug 25, 2020 4:15 pm You can search this forum for “transfer funds” but to make it simple — call Vanguard and have them pull the money. Don’t try to push it over. They have experts to help you.

GMT
what do u mean "dont try to push it over''
There are two primary ways to transfer accounts. One is to ask your current firm to "push" the funds to your new company. The other is to open your new account(s) and have that company "pull" the assets in from the old. The pull method is generally preferred...
rkhusky
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Re: transfer funds

Post by rkhusky »

Have Vanguard pull the money from your institution, rather than having your institution push the money to Vanguard.
sycamore
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Re: transfer funds

Post by sycamore »

gautamsa wrote: Tue Aug 25, 2020 4:08 pm Hello, I am planning to let go of my advisor and enter the VTSAX and maybe the VTIAX funds. However I need to have my money from my institution transferred over to Vanguard. Can my current financial advising company (its a well known one) create any hassles as I will be leaving them...as in charge me fees (besides the usual AUM and front end loads...I dont have any back end loads). I guess I want to find out whether there are any things to watch out for and make sure the company does not give me a nice parting gift (which I have no clue of) to "settle scores". If I have X number of dollars in all my funds with them will all X transfer seamlessly? I am assuming there will be some capital gains taxes to be paid ? Anything else ?
If it's a reputable company, they and Vanguard will use a system called ACAT to facilitate the transfer. Here's a starting point for the transfer at Vanguard: https://investor.vanguard.com/contact-u ... -there-any

In addition to knowing about transfer and account closing fees, you should gather all the relevant records first. E.g., if this is a taxable account, you must keep records of the basis of all your purchases, so make sure you log in and download all your transaction confirmations. Do this before initiating the transfer because your old institution may "lock" your old account once you start the transfer (typically transferring all securities in an account means you want the account shut down).

You should probably transfer your holdings "in kind" meaning don't sell them before transferring. The transfer request form has an option for you to say whether to liquidate or not. If you liquidate first, then that's a taxable event (for a gain or a loss). Whether that's a good or bad thing is a whole 'nother question. If you want feedback on that, you should post the securities and their gain/loss here.

Also, if you have any partial shares (like .123 shares if you had 544.123 shares of a fund) they will be liquidated before the transfer. The proceeds will sometimes stay in your old account until the end of the month, then they'll be transferred over to the new account.
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celia
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Re: transfer funds

Post by celia »

gautamsa wrote: Tue Aug 25, 2020 4:08 pm Hello, I am planning to let go of my advisor and enter the VTSAX and maybe the VTIAX funds. However I need to have my money from my institution transferred over to Vanguard. Can my current financial advising company (its a well known one) create any hassles as I will be leaving them...as in charge me fees (besides the usual AUM and front end loads...I dont have any back end loads). I guess I want to find out whether there are any things to watch out for and make sure the company does not give me a nice parting gift (which I have no clue of) to "settle scores". If I have X number of dollars in all my funds with them will all X transfer seamlessly? I am assuming there will be some capital gains taxes to be paid ? Anything else ?
You should be able to find out if there are any account closing fees on the current custodian's website. Also make a record of the cost basis (how much you paid, including commissions) for each asset in taxable accounts, in case this doesn't transfer over to Vanguard. When you sell some day, then the "gains" will be realized and you will have to pay taxes on the gain. There are no "capital gains" until you sell. And you can spread the sales over several years to minimize taxes, if that helps.

The old advisor may/should call you to confirm that you intentionally moved the funds elsewhere rather than your account(s) being hacked. When that happens, kindly thank her/him for their help getting you started in investing and that you now feel confident in investing on your own. Do not discuss WHY you moved or your future plans, as they may wear you down trying to get you back.
Topic Author
gautamsa
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Re: transfer funds

Post by gautamsa »

ok thanks everyone for the insights. So I assume when I transfer I should tell Vanguard I want to invest in a fund (eg VTSAX) and the money will show up in the fund maybe in a few days ? I dont want to sell or liquidate anything...just transfer them over. So I guess I dont pay any capital gains tax.
Also if I have a recurring payment going on from my savings account I should let my bank know not to allow any further payments to this institute ?
sycamore
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Re: transfer funds

Post by sycamore »

gautamsa wrote: Tue Aug 25, 2020 5:42 pm ok thanks everyone for the insights. So I assume when I transfer I should tell Vanguard I want to invest in a fund (eg VTSAX) and the money will show up in the fund maybe in a few days ? I dont want to sell or liquidate anything...just transfer them over. So I guess I dont pay any capital gains tax.
You want to first of all set up a new account at Vanguard. It sounds like you're talking about a taxable/non-retirement account as opposed to an Traditional or Roth IRA, yes? You need to set up a new account that matches the same name and type as your existing account.

Next step is to consider which mutual funds to own. You need to decide this before you start the transfer. Maybe your existing funds are fine and will meet your needs just as well as VTSAX. We can't help you decide because we don't know what funds you currently own.

The reason to decide before transferring is that if you do want to sell some funds, it might be cheaper/easier to do so in your current account (e.g., Vanguard charges $20 but your current account charges nothing). If you sell a fund and transfer the proceeds (as cash) to Vanguard, then you could buy the Vanguard funds at Vanguard for no fee.

If you're not sure what to do, go ahead and transfer everything "in-kind." Report back here and we can help figure out which investments are good for keeping or not. Worst-case you'll have to pay a $20 fee to Vanguard, not nothing but not the end of the world.

Transferring "in-kind" means your funds won't be liquidated and therefore you won't incur capital gains or losses. Please note that any fractional shares will be liquidated and you will have gain or loss on them, but we're talking about less than one share so it'll be a very small amount. And your broker will not take out any money for capital gains taxes -- you're responsible for that, usually you pay for it when you file your taxes.
gautamsa wrote: Tue Aug 25, 2020 5:42 pm Also if I have a recurring payment going on from my savings account I should let my bank know not to allow any further payments to this institute ?
If you drop the question mark at the end of that sentence and replace it with a period, you'll have the answer! :) In other words, yes.
Topic Author
gautamsa
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Re: transfer funds

Post by gautamsa »

sycamore wrote: Tue Aug 25, 2020 8:36 pm
gautamsa wrote: Tue Aug 25, 2020 5:42 pm ok thanks everyone for the insights. So I assume when I transfer I should tell Vanguard I want to invest in a fund (eg VTSAX) and the money will show up in the fund maybe in a few days ? I dont want to sell or liquidate anything...just transfer them over. So I guess I dont pay any capital gains tax.
You want to first of all set up a new account at Vanguard. It sounds like you're talking about a taxable/non-retirement account as opposed to an Traditional or Roth IRA, yes? You need to set up a new account that matches the same name and type as your existing account.

Next step is to consider which mutual funds to own. You need to decide this before you start the transfer. Maybe your existing funds are fine and will meet your needs just as well as VTSAX. We can't help you decide because we don't know what funds you currently own.

The reason to decide before transferring is that if you do want to sell some funds, it might be cheaper/easier to do so in your current account (e.g., Vanguard charges $20 but your current account charges nothing). If you sell a fund and transfer the proceeds (as cash) to Vanguard, then you could buy the Vanguard funds at Vanguard for no fee.

If you're not sure what to do, go ahead and transfer everything "in-kind." Report back here and we can help figure out which investments are good for keeping or not. Worst-case you'll have to pay a $20 fee to Vanguard, not nothing but not the end of the world.

Transferring "in-kind" means your funds won't be liquidated and therefore you won't incur capital gains or losses. Please note that any fractional shares will be liquidated and you will have gain or loss on them, but we're talking about less than one share so it'll be a very small amount. And your broker will not take out any money for capital gains taxes -- you're responsible for that, usually you pay for it when you file your taxes.
gautamsa wrote: Tue Aug 25, 2020 5:42 pm Also if I have a recurring payment going on from my savings account I should let my bank know not to allow any further payments to this institute ?
If you drop the question mark at the end of that sentence and replace it with a period, you'll have the answer! :) In other words, yes.
Ok thanks. Below are some of the funds I hold. If I had $1000 sitting in each of them that means I have $3000, do I convert them to cash in my current institute and then transfer them to Vanguard ? I dont want to keep these funds and I dont want to withdraw the money for personal use just transfer them or whatever they are worth into Vanguard index funds. Will that translate into the minimum $3000 in Vanguard which one needs to have to buy the VTSAX fund ?

FICGX
FISSX
FIUSX
alex_686
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Re: transfer funds

Post by alex_686 »

The ACTS process takes 2 weeks. Then there is a clean up process that might take another month. Stray dividends and the like.

The asset will be moved to your new broker. Same cost basis. Make sure that Vanguard can hold the assets. They may not be able to hold some mutual funds or exotic assets like private REITS. These tend to be the exception.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
sycamore
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Re: transfer funds

Post by sycamore »

gautamsa wrote: Tue Aug 25, 2020 9:04 pm ...
Ok thanks. Below are some of the funds I hold. If I had $1000 sitting in each of them that means I have $3000, do I convert them to cash in my current institute and then transfer them to Vanguard ? I dont want to keep these funds and I dont want to withdraw the money for personal use just transfer them or whatever they are worth into Vanguard index funds. Will that translate into the minimum $3000 in Vanguard which one needs to have to buy the VTSAX fund ?

FICGX
FISSX
FIUSX
I agree that it's a good idea to sell those funds. With around $1000 in each, you won't have much in capital gains or losses to worry about. Sell them at your current institution -- the proceeds will be put in your settlement fund, typically as cash or a money market fund.

Ask Vanguard to transfer your entire account in-kind. The settlement fund and any other mutual funds/ETFs you own will be transferred over. The settlement fund at Vanguard is invested in the Vanguard Federal Money Market Fund.

Once the transfer is completed, enter an order to buy VTSAX. As you noted, the minimum is $3000. The money for that will come from your Vanguard settlement fund.

Congrats on making this move: you'll save on fund expenses and get invested in a great all-around fund VTSAX.
egrets
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Re: transfer funds

Post by egrets »

I have always had the destination financial institution pull funds from the source institution.

One time this did not work. Vanguard was the destination and they were on pause for over a month with no progress pulling funds from a small credit union. The only info I could get from Vanguard customer service was the credit union was not in some database, with no one at Vanguard apparently taking ownership of fixing whatever was holding things up. They would not let me speak to processing to find out what was wrong and get it fixed.

I finally canceled the Vanguard process, drove to the credit union, got a check, drove to Schwab and handed Schwab the check. As I recall this was an IRA, so I had to act as just a courier.

I now avoid having Vanguard deal with credit unions and have Schwab pull funds from those credit unions.
Lalamimi
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Re: transfer funds

Post by Lalamimi »

Fidelity transferred our EJ funds back in Nov. Several could not be transferred and they delayed about a week to sell and transfer the funds. I suggest you contact Vanguard and determine which funds they cannot accept, and have your current advisor liquidate now. Give a vague reason, like 'time is right" etc. Then, once that has happened, have Vanguard transfer all assets. FIRST, print out everything you can from your current account, as it will be locked immediately.
alex_686
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Re: transfer funds

Post by alex_686 »

sycamore wrote: Tue Aug 25, 2020 4:47 pm If it's a reputable company, they and Vanguard will use a system called ACAT to facilitate the transfer. Here's a starting point for the transfer at Vanguard: https://investor.vanguard.com/contact-u ... -there-any
I will second this. Except this is the way to go even with disreputable companies. Especially with disreputable companies.

ACAT is the industry standard to move from one brokerage to another. Start ACAT and there is a procedure in place. Start ACAT and your old brokerage company will be held to a standard and must preform.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
gautamsa
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Joined: Sun Aug 09, 2020 7:31 pm

Re: transfer funds

Post by gautamsa »

thanks for all the great inputs. If I am not withdrawing any funds for personal use but just moving them from one institution to another "in kind" do I still need to pay capital gains tax ?
And do I have to liquidate ? Cant I just ask Vanguard to do it themselves as part of the ACAT process ?
alex_686
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Re: transfer funds

Post by alex_686 »

gautamsa wrote: Wed Aug 26, 2020 10:22 am thanks for all the great inputs. If I am not withdrawing any funds for personal use but just moving them from one institution to another "in kind" do I still need to pay capital gains tax ?
And do I have to liquidate ? Cant I just ask Vanguard to do it themselves as part of the ACAT process ?
1. You are transferring assets. It is not a sale. So no capital gains.

2. You don't have to liquidate. No, you can't ask Vanguard to liquidate. Liquidation in fact is nowhere on the menu. ACAT stands for "Automated Customer Account Transfer". It only does transfers.

To extend on #2 a bit, make sure you liquidate any assets that you can't transfer to Vanguard in your old brokerage account prior to transfer. These can't transfer and will be left behind in your old account.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
krow36
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Re: transfer funds

Post by krow36 »

gautamsa wrote: Wed Aug 26, 2020 10:22 am thanks for all the great inputs. If I am not withdrawing any funds for personal use but just moving them from one institution to another "in kind" do I still need to pay capital gains tax ?
And do I have to liquidate ? Cant I just ask Vanguard to do it themselves as part of the ACAT process ?
If you don't want to keep those Fidelity funds, you have to sell them. You can sell them at your current broker or at Vanguard after they transfer "in kind". If you sell them for more than you've paid for them, there's a capital gain. It will be small if your funds total $3000. Depending on your taxable income, your capital gains are probably taxed at 0% or 15%.
Sahara
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Re: transfer funds

Post by Sahara »

In terms of logistics, I believe it goes like this:

If you liquidate the funds at the current provider and request a transfer via Vanguard, the money will “disappear” for 7 to 14 days after the transfer is initiated. When the money “reappears” it will be in the settlement fund at Vanguard. This is the Federal Money Market mutual fund. You will then use the $3,000 in the settlement fund to “buy” VTSAX.

If your funds transfer in kind, the funds will “disappear” for 7 to 14 days. When the funds “reappear” at Vanguard you will “exchange” them for VTSAX.

Next, you will set up any recurring contributions.
sleeker
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Re: transfer funds

Post by sleeker »

Sahara wrote: Thu Aug 27, 2020 12:04 pm In terms of logistics, I believe it goes like this:

If you liquidate the funds at the current provider and request a transfer via Vanguard, the money will “disappear” for 7 to 14 days after the transfer is initiated. When the money “reappears” it will be in the settlement fund at Vanguard. This is the Federal Money Market mutual fund. You will then use the $3,000 in the settlement fund to “buy” VTSAX.

If your funds transfer in kind, the funds will “disappear” for 7 to 14 days. When the funds “reappear” at Vanguard you will “exchange” them for VTSAX.

Next, you will set up any recurring contributions.
I'm doing something nearly identical to what the OP is doing: getting rid of my advisor and moving accounts to Vanguard.

As others have mentioned, I called Vanguard to have them pull the money over. So far, the money is gone from one of my accounts, but not yet in Vanguard.

Is this the 7-14 day "disappearance" you're referring to?
Sahara
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Re: transfer funds

Post by Sahara »

That it is!

I’ve done 2 transfers. For the first transfer, I mailed the forms to the TPA on 5/30, funds were withdrawn from the former 403b on 6/10 and deposited into the Vanguard 403b on 6/20.

For the second transfer I mailed the forms 8/28, funds were withdrawn from the former 403b on 9/3 and deposited into the Vanguard 403b on 9/11.
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