Inherited Edward Jones Account: Transfer to Vanguard?

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R2
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Joined: Sat Jun 05, 2010 1:18 pm

Inherited Edward Jones Account: Transfer to Vanguard?

Post by R2 » Fri May 22, 2020 12:39 pm

Hi All,

Both of my parents passed away in the last year and I have inherited some of their inherited accounts.

The value of this account is small relative to my retirement account> I have an emergency fund, so don't need the money for that purpose. I am currently funding all tax advantaged accounts with my income stream.

I am contemplating moving all of the funds to Vanguard for simplicity.

Here are details (not drilling way down):

Single Account (cash and investments): $36k
Traditional IRA-1: $9k
Traditional IRA-2: $18k
Roth IRA-1: $1k

Is there a good reason to not just transfer the money to Vanguard? (my work 401K is with Fidelity, and that is an option, as well)

I have access to deferred compensation at my workplace and could do that if there is a reason to do so for tax savings. I am not currently considering this as a meaningful tool for this transaction, but including as an options.

Thanks in advance.

R2

terran
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by terran » Fri May 22, 2020 12:51 pm

Transferring to either Vanguard or Fidelity sounds like a great idea. I'm sure you'll be able to get it done, but expect a bit of a fight from EJ (and some parting "gifts" in the form of excessive account transfer/closing fees). Search the forum if you want to read more about this, but as long as you're persistent and firm you shouldn't have problem. Most of the issues people seem to run into is when they let the advisor convince them to second guess their decision to leave.

If the most recent death was within 2020 remember that the IRAs will need to be depleted within the next 10 years.

carmonkie
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by carmonkie » Fri May 22, 2020 12:53 pm

R2, Sorry to hear about your loss.

I think your parents were using a Financial Advisor so that might be the main reason to move over to Vanguard or Fidelity. That should save you some money in expenses and their FA was probably using some high-cost funds there.

You should take advantage from Step-up cost basis so making the transfer now would incur minimum tax if the account appreciated over time. Move to your preferred broker and re-allocate based on your AA or donate some money if that is what your parents would have liked.

Topic Author
R2
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by R2 » Fri May 22, 2020 1:04 pm

Thanks for the prompt feedback.

Any thoughts about moving the money to a donor advised fund? I have increased my giving in light of recent events, but don't have a DAF.

If a DAF is recommended, is Vanguard a good choice?

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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by Jack FFR1846 » Fri May 22, 2020 1:11 pm

Both Vanguard and Fidelity are well known for their DAFs. Can't go wrong with either one.
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terran
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by terran » Fri May 22, 2020 1:33 pm

The main advantage of a DAF is that lets you realize a large charitable itemized deduction in a single year and then make the actual charitable donations in future years. So if you itemize every year then it wouldn't really make sense. But if you would take the standard deduction except for your charitable contributions then it would make sense to bunch your charitable deduction up to the limit in one year and then take the standard deduction in some number of future years depending on how many years worth of contributions you were able to bunch into that one year.

sport
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by sport » Fri May 22, 2020 1:38 pm

When you move the IRAs, be sure they are titled correctly for inherited IRAs. If the deaths occurred prior to 2020, you will have RMDs for all these IRA accounts. If the deaths occurred in 2020, you must withdraw all the IRA money within 10 years. For the taxable account, be sure you have the cost basis information prior to moving it because it may be difficult to get that information after a move. There is likely a cost basis step up at the times of deaths.

livesoft
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by livesoft » Fri May 22, 2020 1:42 pm

R2 wrote:
Fri May 22, 2020 1:04 pm
Thanks for the prompt feedback.

Any thoughts about moving the money to a donor advised fund? I have increased my giving in light of recent events, but don't have a DAF.

If a DAF is recommended, is Vanguard a good choice?
Use other assets to contribute to a DAF if you can. Best are taxable account investments that have the highest percentage of long-term unrealized capital gains. These inherited assets cannot meet those requirements for "best." You cannot donate IRA assets to a DAF because you are likely too young, but you can always cash them in, pay any taxes, then donate the cash. You would only get a tax-break on cash if you can deduct the cash contribution via itemizing on Schedule A, but I thiink there is a token other deduction provided by the CARES act.

Fidelity is a better choice for DAF as described many times on this forum, so one can easily research why that is the case.
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Topic Author
R2
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by R2 » Fri May 22, 2020 1:45 pm

Thanks, terran.

I have been using the standard deduction in recent years, so the DAF may make sense.

I would like to improve the efficiency of my current giving, as well.

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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by Vanguard Fan 1367 » Fri May 22, 2020 1:51 pm

I am a fan of Vanguard’s low fees. I certainly would recommend taking advantage of those fees.

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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by nix4me » Fri May 22, 2020 1:56 pm

If the 60ish k won’t put you into higher tax bracket, I would just pull it all, pay the taxes and put the cash in a taxable brokerage account in total stock market. Giving money away to keep from paying some taxes is not smart in my opinion.

Topic Author
R2
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Joined: Sat Jun 05, 2010 1:18 pm

Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by R2 » Fri May 22, 2020 3:02 pm

Checking back.

I am 55 years old, as related to tax efficiency and fund allocation.

Because of other inheritance, i will be adding to my incremental income and am planning to pay estimated taxes this quarter. I also have the potential of higher than expected bonus at work. Income + bonus is much larger than expected in retirement. If it is not, I will donate a lot more money.

I am also heavy cash because of the other inheritance. I have been in an all-in-one fund and have been considering transitioning to a 3 fund portfolio, from it. I plan on gifting the maximum allowable to two of my children to wrap up college financial agreements.

Perhaps I should gift and donate the appropriate amount of money out of the LifeStrategy fund and buy into a 3 fund portfolio with the EJ funds?

R2

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Stinky
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Re: Inherited Edward Jones Account: Transfer to Vanguard?

Post by Stinky » Sat May 23, 2020 10:42 am

R2 wrote:
Fri May 22, 2020 1:04 pm
Thanks for the prompt feedback.

Any thoughts about moving the money to a donor advised fund? I have increased my giving in light of recent events, but don't have a DAF.

If a DAF is recommended, is Vanguard a good choice?
I agree with getting money out of Edward Jones. Anywhere but Jones!

It would be fine to move all funds to Vanguard. That's where all of our non-DAF money is.

But if you want a DAF, I'd strongly suggest that you look at Fidelity, where we have our DAF. I believe that the DAF fees are similar between Vanguard and Fidelity. But the big difference is that Fidelity's minimum "grant" size is $50, while Vanguard's is $500. For us, we make a lot of $100-$250 gifts, and we prefer using our Fidelity DAF to fund those gifts than going out of pocket, which is what we would need to do if we were at Vanguard.
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