To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

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Topic Author
Aspiringbogle
Posts: 7
Joined: Tue Mar 27, 2018 8:47 am

To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Aspiringbogle »

hi All,

Few months ago I got laid off due to the pandemic.
I am a 42 yr old female.
I still have my ex employer 401k sitting with Merrill Lynch under their Moderate Model.
I would like to move to an IRA just debating between self directed Merrill Edge or Vanguard.
I am a preferred Platinum rewards member for Merrill.
Moving to Merrill Edge may not provide any joining bonuses while Vanguard would.
Please advise on which one would be a better option ?
Would it be advisable to rollover into Roth IRA as well or split between TIRA and Roth IRA ?

Also once I move it to Vanguard IRA would allocating 40% into VTSAX, 20% into VBTLX and 20% into VTIAX be a good starting point for a 3 fund portfolio ?.
I do have extra liquid cash in my account which I need to invest and own a TD Ameritrade account which allows buying Vanguard funds.
Would it be a good idea to follow the same 3 fund portfolio for the extra cash in the TD Ameritrade account or have another account in Vanguard for the non retirement funds ? Are there extra fees for buying vanguard funds in TD account ?

If you see my previous post in 2018 , I am kind of still where I was, due to some personal tragedy and issues I was dealing and could not focus on financial planning.
But hoping to get back on track now that I have time on hand before I find another employment.

Kindly Advise.
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Wiggums
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Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Wiggums »

Link to previous thread from OP:
viewtopic.php?f=1&t=245428&p=3850210#p3850210

You will get better responses if you take the time to complete the asking portfolio questions.
viewtopic.php?f=1&t=6212&p=76191#p76191

I didn’t know vanguard was offering a bonus. Are they?

“move it to Vanguard IRA would allocating 40% into VTSAX, 20% into VBTLX and 20% into VTIAX be a good starting point for a 3 fund portfolio ?.”

This only adds up to 80%

Would it be a good idea to follow the same 3 fund portfolio for the extra cash in the TD Ameritrade account or have another account in Vanguard for the non retirement funds ?

You should be looking across all your accounts. See fund placement
https://www.bogleheads.org/wiki/Tax-eff ... _placement

Would it be advisable to rollover into Roth IRA as well or split between TIRA and Roth IRA ?
Depends on your Financial goals, tax bracket and ability to pay the taxes
sycamore
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Joined: Tue May 08, 2018 12:06 pm

Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by sycamore »

Aspiringbogle wrote: Mon Jan 11, 2021 7:08 pm ...
Moving to Merrill Edge may not provide any joining bonuses while Vanguard would.
For what it's worth, Merrill Edge has a bonus offer good through April 15, 2021. In general, Vanguard doesn't seem to offer bonuses.

If you're into "chasing bonuses", going with ME is a fine option at least for as long as it takes to earn the bonus. One idea is to first rollover your 401k to a self directed ME IRA account (make sure the IRA account matches the type of your 401k: Trad versus Roth). Invest it in Vanguard's ETFs (VTI for Total Stock, BND for Total Bond, VXUS for Total International Stock). That should count toward earning the bonus. Once you've earned the bonus, revisit your options - keep it at ME, or transfer to another brokerage to get another bonus.

If you're not into the bonus chasing, do you value simplicity? Some people prefer to deal with as few institutions as possible. Given you've got a relationship with Bank of America and Merrill Edge, that'd be a good place to move your 401k assets to.
Topic Author
Aspiringbogle
Posts: 7
Joined: Tue Mar 27, 2018 8:47 am

Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Aspiringbogle »

As Wiggums suggested , here is my portfolio

Emergency funds: More than a year worth of expenses
Debt: Home loan , 2.75 interest rate , another 8 years worth of loan pending.
Tax Filing Status: Married Filing Jointly
Tax Rate: 28% Federal, 0% State
State of Residence: TX
Age: 42

Desired Asset allocation: 60% stocks / 20% bonds
Desired International allocation: 20% of stocks

Total Portfolio: Middle 6 figures

Current retirement assets
Taxable
40% cash (of total assets)
30% ( of total assets ) multiple S&P 500 stock companies with good earnings as invested in a bear market but pulling them out after booking profits.

His 401k
VANGUARD TARGET RET 2040 TR II ( 20% of total assets)

Her 401k
Merill Lynch GoalManager® Portfolio Rebalancing Service : Moderate Model - multiple funds ( 10% of total assets)
Topic Author
Aspiringbogle
Posts: 7
Joined: Tue Mar 27, 2018 8:47 am

Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Aspiringbogle »

sycamore wrote: Mon Jan 11, 2021 7:35 pm
Aspiringbogle wrote: Mon Jan 11, 2021 7:08 pm ...
Moving to Merrill Edge may not provide any joining bonuses while Vanguard would.
For what it's worth, Merrill Edge has a bonus offer good through April 15, 2021. In general, Vanguard doesn't seem to offer bonuses.

If you're into "chasing bonuses", going with ME is a fine option at least for as long as it takes to earn the bonus. One idea is to first rollover your 401k to a self directed ME IRA account (make sure the IRA account matches the type of your 401k: Trad versus Roth). Invest it in Vanguard's ETFs (VTI for Total Stock, BND for Total Bond, VXUS for Total International Stock). That should count toward earning the bonus. Once you've earned the bonus, revisit your options - keep it at ME, or transfer to another brokerage to get another bonus.

If you're not into the bonus chasing, do you value simplicity? Some people prefer to deal with as few institutions as possible. Given you've got a relationship with Bank of America and Merrill Edge, that'd be a good place to move your 401k assets to.
I am not willing or rather not chase bonuses. As I am asking around for information , one of the friends suggested the benefit of moving to another brokerage than I am in. Thank you for the suggestion , I will try to stick to Merill Edge IRA for now . But with the above portfolio , age and tax bracket , what would be a good AA for the 401k/ IRA assets of 30% and the 40% cash for investment ?

Apologize ahead if I ask basic questions because the terminology, the different funds , the different expense rates and fees etc, are quite confusing. I have read the Common Sense book and also the 3 fund portfolio book and have gained some knowledge now.
sycamore
Posts: 1585
Joined: Tue May 08, 2018 12:06 pm

Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by sycamore »

Aspiringbogle wrote: Mon Jan 11, 2021 8:13 pm ...
I am not willing or rather not chase bonuses. As I am asking around for information , one of the friends suggested the benefit of moving to another brokerage than I am in. Thank you for the suggestion , I will try to stick to Merill Edge IRA for now . But with the above portfolio , age and tax bracket , what would be a good AA for the 401k/ IRA assets of 30% and the 40% cash for investment ?

Apologize ahead if I ask basic questions because the terminology, the different funds , the different expense rates and fees etc, are quite confusing. I have read the Common Sense book and also the 3 fund portfolio book and have gained some knowledge now.
I think sticking with Merrill Edge IRA is a good plan for now.

To figure out the right AA for the 401k and IRAs, here are some questions and assumptions:
1. Regarding taxable, it sounds like you have a plan for the 30% in stocks, correct? In taxable, you're looking for suggestions only for the 40% in cash, yes?

2. His 401k in the Target Retirement 2040 fund is good. Low-cost, with roughly 80% stocks / 20% bonds.

3. Moving Her 401k to an IRA is a good idea - I suspect Merrill's "GoalManager" service is not low cost. I'm not sure but I'll assume it's currently 60/40. No idea how much in International, but it's low enough to just assume 0% currently.

4. As Wiggums noted, you wrote "Desired Asset allocation: 60% stocks / 20% bonds" and "Desired International allocation: 20% of stocks" but that's only 80% of the total - 20% is missing!
Rather than Intl stocks being 20% of stocks, do you really mean 20% of the total portfolio?

For now, I'll assume you want 80% stocks (60% US + 20% Intl) / 20% Bonds.

5. Your current portfolio is invested as follows:
Taxable 70% of overall: 30% US Stocks, 40% Bonds (treat cash same as bonds)
His 401k 20% of overall: 10% US stock, 6.5% Intl stock, 3.5% Bonds
Her 401k 10% of overall: 6% US stock, 4% Bonds

With the above assumptions in mind, here's one option:

Taxable 70% of overall
30% in multiple S&P 500 stocks. Leave as-is / up to you. Counts as 30% US Stock.
Take the 40% cash and
1) invest 20% in Vanguard Total Stock Market Fund (VTSAX)
2) invest 13.5% in Vanguard Total International Stock Market Fund (VTIAX)
3) invest 6.5% in either Vanguard Intermediate Term Tax-Exempt Bond Fund (VWIUX) or Vanguard Total Bond Market Fund. I didn't run the numbers, but in the 28% bracket, it's likely a wash between those two. If you're okay investing in municipal bonds, go with VWIUX. Otherwise use VBTLX. They're likely to perform similarly.

His 401k 20% of overall
Leave in Target Retirement 2040. 10% US stock, 6.5% Intl stock, 3.5% Bonds

Her 401k 10% of overall
Move this to an IRA. Invest it in Vanguard Total Bond Market fund (The commission free ETF at Merrill Edge is "BND"). 10% Bonds.

If I added correctly, you'll have:
US Stock: 60% total = 30% in taxable stocks + 20% in taxable VTSAX + 10% His 401k
Intl Stock: 20% total = 13.5% in taxable VTIAX + 6.5% in His 401k
Bonds: 20% total = 6.5% in taxable VWIUX + 3.5% in His 401k + 10% Her IRA

Hope that helps. Let us know if you have any questions!
Topic Author
Aspiringbogle
Posts: 7
Joined: Tue Mar 27, 2018 8:47 am

Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Aspiringbogle »

sycamore wrote: Mon Jan 11, 2021 9:04 pm
Aspiringbogle wrote: Mon Jan 11, 2021 8:13 pm ...
I am not willing or rather not chase bonuses. As I am asking around for information , one of the friends suggested the benefit of moving to another brokerage than I am in. Thank you for the suggestion , I will try to stick to Merill Edge IRA for now . But with the above portfolio , age and tax bracket , what would be a good AA for the 401k/ IRA assets of 30% and the 40% cash for investment ?

Apologize ahead if I ask basic questions because the terminology, the different funds , the different expense rates and fees etc, are quite confusing. I have read the Common Sense book and also the 3 fund portfolio book and have gained some knowledge now.
I think sticking with Merrill Edge IRA is a good plan for now.

To figure out the right AA for the 401k and IRAs, here are some questions and assumptions:
1. Regarding taxable, it sounds like you have a plan for the 30% in stocks, correct? In taxable, you're looking for suggestions only for the 40% in cash, yes?

2. His 401k in the Target Retirement 2040 fund is good. Low-cost, with roughly 80% stocks / 20% bonds.

3. Moving Her 401k to an IRA is a good idea - I suspect Merrill's "GoalManager" service is not low cost. I'm not sure but I'll assume it's currently 60/40. No idea how much in International, but it's low enough to just assume 0% currently.

4. As Wiggums noted, you wrote "Desired Asset allocation: 60% stocks / 20% bonds" and "Desired International allocation: 20% of stocks" but that's only 80% of the total - 20% is missing!
Rather than Intl stocks being 20% of stocks, do you really mean 20% of the total portfolio?

For now, I'll assume you want 80% stocks (60% US + 20% Intl) / 20% Bonds.

5. Your current portfolio is invested as follows:
Taxable 70% of overall: 30% US Stocks, 40% Bonds (treat cash same as bonds)
His 401k 20% of overall: 10% US stock, 6.5% Intl stock, 3.5% Bonds
Her 401k 10% of overall: 6% US stock, 4% Bonds

With the above assumptions in mind, here's one option:

Taxable 70% of overall
30% in multiple S&P 500 stocks. Leave as-is / up to you. Counts as 30% US Stock.
Take the 40% cash and
1) invest 20% in Vanguard Total Stock Market Fund (VTSAX)
2) invest 13.5% in Vanguard Total International Stock Market Fund (VTIAX)
3) invest 6.5% in either Vanguard Intermediate Term Tax-Exempt Bond Fund (VWIUX) or Vanguard Total Bond Market Fund. I didn't run the numbers, but in the 28% bracket, it's likely a wash between those two. If you're okay investing in municipal bonds, go with VWIUX. Otherwise use VBTLX. They're likely to perform similarly.

His 401k 20% of overall
Leave in Target Retirement 2040. 10% US stock, 6.5% Intl stock, 3.5% Bonds

Her 401k 10% of overall
Move this to an IRA. Invest it in Vanguard Total Bond Market fund (The commission free ETF at Merrill Edge is "BND"). 10% Bonds.

If I added correctly, you'll have:
US Stock: 60% total = 30% in taxable stocks + 20% in taxable VTSAX + 10% His 401k
Intl Stock: 20% total = 13.5% in taxable VTIAX + 6.5% in His 401k
Bonds: 20% total = 6.5% in taxable VWIUX + 3.5% in His 401k + 10% Her IRA

Hope that helps. Let us know if you have any questions!
Thank you Sycamore , that is great advice.
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Eagle33
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Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by Eagle33 »

Being in the 28% federal tax bracket, hopefully you are contributing the max ($19.5k) to His 401k. If not, you should max the 401k and use some of the taxable 40% cash to fund the reduction in take home pay.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
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Re: To Rollover Merill Lynch 401 k to Merill Edge /Vanguard IRA

Post by placeholder »

I can't tell from the offer whether coming from a merrill 401k would prevent a bonus but you might as well call and see if they'll give you one also there's a somewhat higher one available https://www.merrilledge.com/offers/me1000
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