Vanguard roth ira question [Purchasing funds]

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i04p
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Joined: Sun Mar 02, 2014 10:21 am

Vanguard roth ira question [Purchasing funds]

Post by i04p » Sun Mar 02, 2014 10:32 am

So the maximum investment one can make to a roth IRA every year is $5,500* ( and if the VTSAX minimum investment is $10,000 how could one purchase admiral shares as opposed to the investor shares version, VTSMX if you are opening a roth IRA for the first time? Say you have $50,000 to invest. Could you open a taxable account and purchase $50,000 worth of VTSAX and then transfer $5,500 worth of these admiral shares into a roth IRA account? Or is this not possible and instead you simply would have to purchase $5,500 of VTSMX the first year and an additional $5,500 of VTSMX the second year and then have Vanguard upgrade these shares to the admiral shares?

* http://www.irs.gov/Retirement-Plans/Amo ... e-For-2013

Laura
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Joined: Mon Feb 19, 2007 7:40 pm

Re: vanguard roth ira question [Purchasing funds]

Post by Laura » Sun Mar 02, 2014 11:49 am

You purchase $5.5k the first year then another amount the second year to hit the $10k total. If you haven't made your 2013 roth contribution yet you can do that and then also add the 2014 money ($11k total) getting you over the limit. Also, if you have another roth at a different firm, you can transfer that to Vanguard and hit the $10k sooner that way.

Laura
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Geologist
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Joined: Fri Jan 02, 2009 7:35 pm

Re: vanguard roth ira question [Purchasing funds]

Post by Geologist » Sun Mar 02, 2014 12:00 pm

First, you cannot contribute shares to an IRA, only cash. So you can't transfer shares you bought as a taxable investment into an IRA (Roth or traditional) as a contribution.

Keep in mind that the cost saving of Admiral shares vs. Investor shares for small account sizes is slight. It is about $1.20/$1000 per year, so you will not incur much extra cost in waiting until the second year to reach the Admiral level.

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: vanguard roth ira question [Purchasing funds]

Post by livesoft » Sun Mar 02, 2014 12:05 pm

Maybe you haven't contributed to a Roth IRA for 2013 yet, but did have enough compensation in 2013 and will have enough in 2014 for the full 2 years of contributions now. So you contribute $11,000 tomorrow and tell Vanguard that is comes from 2013 and 2014. :)
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