Is Vanguard not the best choice for I401k or Sep IRA

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SpartanBull
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Is Vanguard not the best choice for I401k or Sep IRA

Post by SpartanBull » Sat Jan 14, 2017 2:44 am

As an avid believer in both vanguard and this forum, I always just presumed that when I started an I401K I would do so with Vanguard, and when I did that last year I did just that. However I've found it interesting that it seems among bogleheads, Vanguard might not be the most popular provider when it comes to I401k's and/or SEP IRA's. I was just curious what people felt the best choice was to house an I401k and/or SEP IRA. Fidelity, Schwab, Vanguard...maybe theres some other one I'm not thinking of. Just curious to see which one people think has the best offerings currently considering cost, other conveniences, etc. Of course you can build a bogleheads portfolio at any of these, but costs do matter. Thanks in advance for any feedback.

niceguy7376
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by niceguy7376 » Sat Jan 14, 2017 2:48 am

I recommend Fidelity for Solo 401k or SEP IRA or SIMPLE IRA based on my personal experience with them.
u pick your own funds to invest in those accounts.

livesoft
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by livesoft » Sat Jan 14, 2017 8:14 am

The best choice for me was TDAmeritrade. I use Vanguard products at TDAmeritrade with no commissions and no fees.
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objectivefunction
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by objectivefunction » Sat Jan 14, 2017 8:20 am

I don't have any personal experience with it, but one reason I've heard people prefer Fidelity over Vanguard is Fidelity's plan documents will allow rolling in funds from a rollover TIRA whereas Vanguard does not.

Spirit Rider
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by Spirit Rider » Sat Jan 14, 2017 8:28 am

The two main complaints against Vanguard's Individual 401k are the inability to buy Admiral shares and rollover IRA accounts.

The former doubles many index fund expense ratios and the latter possibly inhibits the backdoor Roth.

The are two common alternatives. Fidelity which offers their Premium Class index funds at comparable expense ratios and TD Ameritade which offers commission free access to Vanguard ETFs which are comparable to Admiral shares. They both accept IRA rollovers.

Nthomas
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by Nthomas » Sat Jan 14, 2017 8:49 am

I just opened an individual 401(k) with Schwab and it was quick and easy. It's a brokerage account so you can buy anything you want and of course everything Schwab is commission free. It allows roll overs too so when I start doing back door Roth IRAs I'm going to transfer all of my traditional IRA's into the individual 401(k) to avoid pro rata.

PhillyBird
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by PhillyBird » Sat Jan 14, 2017 8:51 am

I was like you thinking that Vanguard was all I ever needed, and had my SEP-IRA with them for the longest time. But when the time came to open i401k (last year), I've run into a brick wall with Vanguard's inept customer service reps and their not willing to roll SEP-IRA funds into the i401K (I had to roll out my SEP to prepare for Roth backdoor conversion).

I went with Fidelity, and never regretted it. Their index funds are just as good (cheap) as Vanguard's, and customer service is superb. I even have a local branch where I went to get the medallion signature done for free to initiate the SEP transfer.

This has really opened my eyes that Vanguard isn't the only company for cheap index investing. Competition has caught up, and while I appreciate that they were the front-runners in cheap indexes, I no longer consider them to be my "default" choice.

danaht
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by danaht » Sat Jan 14, 2017 9:01 am

I also choose Schwab for the I401k after comparing with Vanguard. Vanguard had limited choices for their i401k and so it was an easy decision. I think I would have also been happy with choosing TD Ameritrade, or Fidelity as well.

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siamond
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by siamond » Sat Jan 14, 2017 9:40 am

I use Vanguard for my SEP-IRA, which I opened some two years ago. Works well for me, simple and efficient. Customer service was helpful and courteous when I called to ask various questions while I was pondering to open it. And they didn't act as greedy sales guys like some other investment companies did... :annoyed

Spirit Rider
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by Spirit Rider » Sat Jan 14, 2017 9:57 am

Just so you know. Vanguard does offer Admiral shares in their SEP IRA. This is what frustrates people wanting to switch to the i401k.

Not only can't they rollover their SEP IRA -> the i401k to enable a backdoor Roth. They can't use Admiral Shares they have been using all along in the SEP IRA in the new i401k.

cadreamer2015
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by cadreamer2015 » Sat Jan 14, 2017 10:09 am

There is probably not one best choice for everyone. I opened my i401k with Vanguard and I'm happy with it. They offer a Roth 401k option, which I like. I have no interest in rolling assets from other accounts into my i401k. My i401k assets will represent less than 3% of my retirement account assets, so an extra 8 basis points of expense due to being limited to investor class funds doesn't bother me. I also like having all my assets with one firm for simplicity.

I can understand that if rolling assets into your i401k is a big deal for you, Vanguard is probably not the right choice. If you have 40 years until retirement and expect that your i401k will be your primary retirement investment vehicle for all that time I suppose the 8 bps extra cost could add up as well.
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Dieharder
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by Dieharder » Sat Jan 14, 2017 10:40 am

+1 for Vanguard i401k

I have considered all of the above mentioned alternatives and came to the conclusion that rollover feature isn't important to me. As for admiral shares, well that really sucks, but I am not complaining too much about it. It all comes down to managing your overall portfolio. My i401k in all likelyhood will be no more than 15%-20% of my overall portfolio by the time I am ready to retire. At this point, it is a tiny fraction since I just had it for a year. Regarding index funds, we need keep in mind Fidelity do not offer index funds in all asset classes, only large cap U.S and Intl and I have access to even cheaper institutional class shares with Vanguard index funds in this area elsewhere. In my i401k, I use Vanguard funds that do not really have an equal competition elsewhere in costs and quality. For instance, Short-Term Bond Index and Minimum Volatility Index. It all comes down to our own unique situation and we need to evaluate all those factors. Customer service is kind of poor, but after I had some intial troubles early on everything is going well now. I don't need to call them, as I do online contibutions. I find it easier to be able to see all my Vanguard accounts with a single login to Vanguard. I do have a 401k from previous employer with Fidelity though with over 300 fund choices and I am keeping it there.

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tfb
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by tfb » Sat Jan 14, 2017 4:03 pm

Not the best choice for individual 401k. SEP-IRA is OK.
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simplesimon
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Re: Is Vanguard not the best choice for I401k or Sep IRA

Post by simplesimon » Sat Jan 14, 2017 4:10 pm

My wife opened a SEP IRA with Vanguard a couple years ago. No serious issues. One time the website was glitchy for a week or two when she wanted to make a contribution. No experience with other mutual fund companies, but I'm sure there are things other companies do better and things they do worse.

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