Author Topic: Transferred IRA from EJ to Vanguard- major fees now  (Read 844 times)

italianant

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Transferred IRA from EJ to Vanguard- major fees now
« on: November 06, 2018, 07:10:21 PM »
With the great advice of this forum, I got out of EJ and transferred my Trad IRA, Roth IRA, and joint mutual accounts to Vanguard. One step at a time, I am trying to get each account sorted out. I'm interested in the lifecycle/targeted funds so it's hands off for me as I'm a beginner, specifically looking at the 2045 target. Today is Trad IRA day :)

I copied and pasted the accounts that I am in currently. In speaking with Vanguard, because these are not Vanguard accounts I'm going to be charged a back end fee, on top of the initial transfer fee. Turns out the fee amount is 1% for each account due to having to sell then exchange, which seems pricey. Curious about any input on whether it's even worth transferring. Should I suck it up and go for it, or is it better to stand pat given the fees? If it is worth the conversion, is it better to do it right away, or wait for a down market day?

Mutual funds
AFICX   American Funds Fundamental Investors® Class C    1.40%

FHICX   Federated High-Income Bond Fund Class C Shares    1.74%

FGFCX   Federated International Leaders Fund Class C Shares    2.17%

GONCX   John Hancock Funds International Growth Fund Class C    1.99%

HBLCX   The Hartford Balanced Income Fund Class C    1.68%
   
« Last Edit: November 06, 2018, 07:39:41 PM by italianant »

MDM

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #1 on: November 06, 2018, 07:30:33 PM »
It's the "Class C" attribute that is causing the problem.  See The Difference Between Classes A, B, and C.

Perhaps the EJ salesperson neglected to explain that?

italianant

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #2 on: November 06, 2018, 07:46:16 PM »
It's the "Class C" attribute that is causing the problem.  See The Difference Between Classes A, B, and C.

Perhaps the EJ salesperson neglected to explain that?
There are a lot of reasons we're leaving EJ, with a lack of transparency being one of them. I appreciate the insight on the Class C issue, that does appear to be the driving factor. Based on your link, it sounds like it's best to bite the bullet and move things over sooner rather than later. Any thoughts on moving sooner or waiting for a down market?

I'd love to hear other people's insights as well. Managing my own funds is a new venture, so it's a bit scary to get going.

terran

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #3 on: November 06, 2018, 08:21:21 PM »
These investments will most likely continue to grow (as most investments should), so assuming the back end load will continue to be a percentage of the balance, getting out sooner rather than later will be most advantageous (because a percentage of a smaller balance is a smaller fee than a percentage of a larger balance).

Frankies Girl

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #4 on: November 06, 2018, 09:03:56 PM »
How much is in the total portfolio you transferred? If it's a few thousand or even 30-40-50K, while you'll still get hit with the fees to divest, it may be better to dump the crap funds before they grow further and get into the low fee/index funds with Vanguard. Some loads go away after holding for certain time periods, so examine the fee load structure to see if this is the case (and make sure you've turned off any reinvesting!)

Honestly, even with it being several hundred thousand, I'd do it in chunks as soon as possible, looking at the highest fee hits and trying to lessen the pain if it would hurt too much to sell off all of it together.

It sucks, but better a small pound of flesh now than costing an arm and leg later on.
« Last Edit: November 06, 2018, 09:08:53 PM by Frankies Girl »

italianant

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #5 on: November 07, 2018, 07:19:05 AM »
Quote
How much is in the total portfolio you transferred? If it's a few thousand or even 30-40-50K, while you'll still get hit with the fees to divest, it may be better to dump the crap funds before they grow further and get into the low fee/index funds with Vanguard.

It's in the $30k range. I'd like to get it into the 2045 Target lifecycle fund.

italianant

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #6 on: November 07, 2018, 07:36:26 AM »
Another thought-- I read this: "A C-share is a class of mutual fund with a level load. Class C shares tend to not have front-end loads, but they often carry small back-end loads. These loads are typically around 1% and may vanish once the investor has held the shares of the mutual fund for a year."

I recall our EJ advisor telling us about this as it required us to keep it in for 1 year. We had it in for several years now at EJ. I wonder if it "restarted" since we transferred them to Vanguard? If we wait a year and then move them to the Target fund, could we avoid the 1% back end fee?


mizzourah2006

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #7 on: November 07, 2018, 07:42:37 AM »
I thought EJ had to get out of the load fees game. Maybe those were grandfathered in.

MDM

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #8 on: November 07, 2018, 11:42:19 AM »
Another thought-- I read this: "A C-share is a class of mutual fund with a level load. Class C shares tend to not have front-end loads, but they often carry small back-end loads. These loads are typically around 1% and may vanish once the investor has held the shares of the mutual fund for a year."

I recall our EJ advisor telling us about this as it required us to keep it in for 1 year. We had it in for several years now at EJ. I wonder if it "restarted" since we transferred them to Vanguard? If we wait a year and then move them to the Target fund, could we avoid the 1% back end fee?
It depends on the specific fund.  You'll have to ask (or read the fine print in the fund prospectus).

italianant

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #9 on: November 08, 2018, 04:24:22 PM »
Wanted to provide an update if anyone else ever has to deal with this.

I called each fund and confirmed that it's 1% fee until I've held it for 1 year, 1 day. So if we do get charged the 1% we can get it reimbursed with proof. Thanks for your guidance all! :)

Car Jack

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #10 on: November 09, 2018, 06:54:12 AM »
You still want to do the math.  If you have held a fund with a 1.99% ER for 6 months, with a 1% load, it's a wash to sell it right now (you pay 1% but avoid 1% on the next 6 months of waiting).  If you have had the fund for more than 6 months, then you come out ahead on *these fees only* by holding for one year and one day.  Here's the problem.  EJ most likely is charging you 1% AUM on everything, so where you think you might be better holding, you're not.  With EJ or any of the other high cost rip off firms, it's almost always better to get out as soon as possible.

If you've moved the funds in kind to someone like Vanguard, then the simple math of the fund only comes into play and you can figure out if it's better to keep or lose the fund now or when the year expires.

Threshkin

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Re: Transferred IRA from EJ to Vanguard- major fees now
« Reply #11 on: November 12, 2018, 07:10:24 PM »
In my experience, it is better to cash out your investments before moving them to Vanguard.  This avoids the fees associated with having non-Vanguard in Vanguard accounts.