VG Traditional IRA Brokerage Account?

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BigMike
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Joined: Mon Sep 06, 2010 5:22 pm

VG Traditional IRA Brokerage Account?

Post by BigMike » Sun May 20, 2018 12:17 pm

My wife recently transferred $13,000 to VG from an old IRA account with another firm that her parents had funded for her. Vanguard put the incoming funds into a "Traditional IRA Brokerage Account" and the funds are currently held in the Vanguard Federal Money Market Fund.

Before we do anything with these funds, I want to make sure I understand what this means. We have rollover accounts with VG from previous employers but these are labeled as "Rollover IRA" or "Traditional IRA." Does the IRA brokerage account operate the same as the other kinds of accounts when it comes to purchasing VG mutual funds? We keep things simple. All our VG funds are held in Lifestrategy Growth. My preference would be to just add this money to Lifestrategy Growth as well. Would there be any issue with doing this?

Thanks!

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FiveK
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Re: VG Traditional IRA Brokerage Account?

Post by FiveK » Sun May 20, 2018 12:19 pm

BigMike wrote:
Sun May 20, 2018 12:17 pm
My preference would be to just add this money to Lifestrategy Growth as well. Would there be any issue with doing this?
None at all. :)

retiredjg
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Re: VG Traditional IRA Brokerage Account?

Post by retiredjg » Sun May 20, 2018 2:28 pm

Vanguard used to keep it's in-house mutual fund business separate from it's brokerage where it sold ETFs and mutual funds from other companies. A few years back, they moved everything to the brokerage side and since then have tried to get everyone to move all their accounts over there. Not everyone has and you and your wife apparently are some who have not yet moved ("upgraded")

All new accounts are brokerage accounts. Thus, the Traditional IRA Brokerage Account.

The mechanics of the brokerage account may be a little different (I don't know - I have not moved), but you can still buy what you want there.

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David Jay
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Location: Michigan

Re: VG Traditional IRA Brokerage Account?

Post by David Jay » Sun May 20, 2018 2:38 pm

BigMike wrote:
Sun May 20, 2018 12:17 pm
Would there be any issue with doing this?
No issue at all.

There can be advantages to having a full-function brokerage account. For example, we are purchasing 100 shares of a cruise company’s stock in order to get significant benefits on an upcoming cruise. I can do that inside of my tIRA with a brokerage account.
Last edited by David Jay on Sun May 20, 2018 8:36 pm, edited 1 time in total.
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Alan S.
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Re: VG Traditional IRA Brokerage Account?

Post by Alan S. » Sun May 20, 2018 3:15 pm

BigMike wrote:
Sun May 20, 2018 12:17 pm
My wife recently transferred $13,000 to VG from an old IRA account with another firm that her parents had funded for her. Vanguard put the incoming funds into a "Traditional IRA Brokerage Account" and the funds are currently held in the Vanguard Federal Money Market Fund.

Before we do anything with these funds, I want to make sure I understand what this means. We have rollover accounts with VG from previous employers but these are labeled as "Rollover IRA" or "Traditional IRA." Does the IRA brokerage account operate the same as the other kinds of accounts when it comes to purchasing VG mutual funds? We keep things simple. All our VG funds are held in Lifestrategy Growth. My preference would be to just add this money to Lifestrategy Growth as well. Would there be any issue with doing this?

Thanks!
You indicated her parents funded this old IRA account. Was the IRA your wife's own IRA or did you mean that she inherited the IRA from a parent?

If she owned the IRA, she may be thinking of consolidating these IRA accounts now at VG. The new account could certainly be combined with what you referred to as the traditional IRA (TIRA) as they are both TIRAs, but not funded by a rollover from an employer plan. But if the "Rollover IRA", which is also a TIRA, but funded from an employer plan is not a low value account, she should not combine that one until other factors are considered.

If the new account is to be combined with the other non rollover TIRA, it should be done by direct trustee transfer of the older TIRA into the new account which you stated is a brokerage IRA account. A Brokerage IRA account is much more versatile and simpler to manage than a mutual fund TIRA. As others have stated she can hold any investments VG offers in a brokerage IRA account.

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