Lately I've been reading a lot of Boglehead-recommended books (currently reading The Boglehead Guide to Investing) and I'm becoming more aware of the impact that cost makes on the investment. When we first invested the money in the first paragraph we didn't really know what we were doing (the 3 international funds have expenses >1% and the Fidelity Freedom Fund is something like 0.82%). We've recently opened up a Vanguard account (and we plan on maxing out our IRA contributions on our new Vanguard account this year) but I've been wondering how easy or advisable it would be for us to move our money from these Fidelity funds to Vanguard. Would it be fairly simple to sell our international funds and move that money into a Vanguard Total International Index for example? Would it be a bad idea for us to sell this investment while it's so low, or does this not really matter if we're going to be putting it back into an International fund right away anyway?
Secondly, is it possible to move a ROTH IRA contribution from Fidelity to Vanguard? Like, could I move the money to a newly-opened retirement account on Vanguard, say, putting the money in a Total Market Index fund and not have it count against my current year IRA contributions? Is this an advisable thing to do?
Lastly, are there any taxes or fees that might come about by doing this that would make the whole process not worthwhile?
camper wrote:I recently transferred my Roth from Fidelity to Vanguard. It is very simple. The cost was $50. You can go to the site (Vanguard) and communicate via messaging or give them a call. It took a couple of weeks. I don't know if you will have to, but I had to sell my positions and put it into cash reserves prior to the transfer.
Was that for a brokerage account? vs mutual fund account?
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I've been doing some transfers from Fidelity to Vanguard, money market to money market, so I've been going through this.
Your best move is to call Vanguard. They have what they call an (Eeeewwwwwwww) "transfer concierge" who's supposed to know the details. In my case, transfers have taken an annoyingly long time, and although I could enter the details online, all that did for me was produce a neatly printed barcoded set of forms that I then needed to fill out and mail in. Fidelity "brokerage" accounts are harder to deal with than mutual fund accounts.
But it's not at all difficult.
GammaPoint wrote:Secondly, is it possible to move a ROTH IRA contribution from Fidelity to Vanguard? Like, could I move the money to a newly-opened retirement account on Vanguard, say, putting the money in a Total Market Index fund and not have it count against my current year IRA contributions? Is this an advisable thing to do?
If you had a bit more assets, I'd recommend Wells Fargo. You'd be able to transfer all accounts in-kind and get free transactions with the PMA-linkage. However, if I'm reading it right you wouldn't have $25k in total, so the PMA account would have $25 a month in fees, which wouldn't be a good thing.
I think the transfer is a good idea – just a couple of suggestions.
1) If you want to speed up the transfer process, I would suggest selling the international funds at Fidelity (if I understand correctly that these are in a taxable account), getting a check cut, and then investing that money in your new Vanguard account through an Electronic Funds Transfer. This could save you a week or more of transfer time.
2) For the Roth IRA’s, I would sell the Freedom Fund while at Fidelity to avoid any sales commissions. Fill out the paperwork on Vanguard.com to directly transfer the Fidelity Roth IRA, making sure that all the names/account #’s/etc. exactly match the information on your Fidelity accounts (this is what can really hold up the process). By doing the direct transfer of the IRA you won’t have to worry about any tax reporting consequences for taking an early IRA distribution and the subsequent reinvestment.
3) If these accounts are for long-term savings (retirement), make sure that both you and your fiancée are maxing out the Roth contributions before putting any more money into a taxable account. The transfer of an IRA to another financial institution doesn’t change your ability to contribute for 2009 - $5000 each for you and your fiancée.
4) As far as tax consequences, you will take a capital loss on the taxable account, which will reduce your tax burden (generally a good thing). The only reason to postpone taking this loss would be if you expect a low income year in 2009 but a significantly higher income in 2010.
5) Fees – I think the above posts are correct in that the only account closing fee at Fidelity will be $50. You will want to check with Fidelity to make sure.
Vanguard will help you with the nuts and bolts of the process but hopefully this will help you along.
Boglenaut wrote:camper wrote:I recently transferred my Roth from Fidelity to Vanguard. It is very simple. The cost was $50. You can go to the site (Vanguard) and communicate via messaging or give them a call. It took a couple of weeks. I don't know if you will have to, but I had to sell my positions and put it into cash reserves prior to the transfer.
Was that for a brokerage account? vs mutual fund account?
It was a brokerage account.
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