Author Topic: Vanguard rollover sweeps and purchases affecting IRA contribution limit?  (Read 180 times)

Apocalyptica602

  • Bristles
  • ***
  • Posts: 261
Hi guys,

Might be a silly question, but I have a sanity check I need done here:

In 2017, I rolled over a former company 401k into an IRA at Vanguard. Vanguard classifies this as a 'Rollover IRA Brokerage Account'

The amount was approximately $120K - it showed up as a check into my settlement fund, and then immediately converted into VTSAX the next day with dividends reinvested. No problem.

Later on, I realized I also had a 'Cash Value Pension' that wasn't rolled over with my 401k. I spent some time calling my former company's benefits department and Vanguard and realized I can roll this over as well into the same IRA.

This happened in Feb 2018 and had a Sweep In of ~$13K.

Stupid me just realized that it was still sitting in the money market and never got converted to VTSAX, now it's June and I'm salty at myself for missed gains.

Essentially - am I able to initiate a 'purchase' of VTSAX in the order of $13K with this money from my settlement fund within the 'Rollover IRA' without causing any taxable implications or issues with the contribution limit?

Thanks!

terran

  • Handlebar Stache
  • *****
  • Posts: 1196
You can buy and sell as much as you want in an IRA. You can only contribute $5500 for each taxable year (which you can do from the first of the year until the tax filing deadline for the year). You can make only one indirect rollover in any 12 month period (indirect meaning you get a check from the old plan, and deposit money in the new plan). You can make as many direct rollovers as you want (direct meaning the old plan sends a check to the new plan and you never touch the money in between). Does that answer your question?

Apocalyptica602

  • Bristles
  • ***
  • Posts: 261
You can buy and sell as much as you want in an IRA. You can only contribute $5500 for each taxable year (which you can do from the first of the year until the tax filing deadline for the year). You can make only one indirect rollover in any 12 month period (indirect meaning you get a check from the old plan, and deposit money in the new plan). You can make as many direct rollovers as you want (direct meaning the old plan sends a check to the new plan and you never touch the money in between). Does that answer your question?

Yep I think so!

So I did two "direct" rollovers, I never received a check in either rollover.

So if I understand this right: direct rollovers have nothing to do with contributions.

I can buy the ~13K of VTSAX (since the funds are already IN the account, just in VMFXX) and still contribute the $5500 this year I was planning to (I have a Roth IRA for that).

Does that sound correct?

robartsd

  • Handlebar Stache
  • *****
  • Posts: 1513
  • Location: Northern California
So I did two "direct" rollovers, I never received a check in either rollover.

So if I understand this right: direct rollovers have nothing to do with contributions.

I can buy the ~13K of VTSAX (since the funds are already IN the account, just in VMFXX) and still contribute the $5500 this year I was planning to (I have a Roth IRA for that).

Does that sound correct?
You are correct.

Rollovers (direct or indirect) have nothing to do with contributions (except that a plan administrator won't know that an indirect rollover is not a contribution if you don't tell them).

terran

  • Handlebar Stache
  • *****
  • Posts: 1196
Agreed, sounds like you've got it!