Author Topic: Can you transfer investments (i.e. to Vanguard) without selling them?  (Read 3688 times)

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 4944
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Seems like a simple enough question. I know, for example, that you can do a rollover of an IRA, and the funds are liquidated, transferred, and then re-invested. You don't pay any taxes, of course, because it's a rollover. At worst, you are losing a week of time that it could have been invested (i.e. dividends/growth) but it's relatively trivial.

But what about taxable investments? Since you're liquidating them, you pay capital gains tax on those sales?

I've been feeling like it's a good idea to get away from the "investment for beginners" at Betterment, and just put everything in Vanguard funds, and learn the (rather simple) art of keeping them balanced according to my desired asset allocation, but I have some anxiety about the impact of the move itself.

Spork

  • Walrus Stache
  • *******
  • Posts: 5742
    • Spork In The Eye
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #1 on: April 04, 2016, 08:24:40 AM »
What you want is an in kind transfer.  If Vanguard sells the funds/stocks you hold, it can probably be done.  Call them.  Their phone support is pretty awesome.

From their site:
Quote
What's an "in kind" transfer?

When you transfer "in kind," you simply move your investments to us "as is." There's no selling or buying involved and no tax consequences either. Vanguard receives your investments at the market value on the date of the transfer. An in-kind transfer is one of the quickest and easiest ways to move an account.
What types of investments can and can't be transferred to Vanguard in kind?

Investments you can transfer in kind include:

    Stocks.
    Bonds.
    Most options.
    Exchange-traded funds (ETFs).
    Unit investment trusts.
    Certificates of deposit (CDs) held in a brokerage account.
    Most mutual funds (although money market funds will be sold and transferred as cash).*

Investments you can't transfer in kind include:

    CDs held directly with a bank.
    Certain options.
    Limited partnerships and private placements.
    Certain mutual funds and other investment products offered exclusively by your current firm.
    Certain low-priced securities traded over the counter (OTC) or on the pink sheets market.
    Commodities.
    Annuities.
    Life insurance policies.


forummm

  • Walrus Stache
  • *******
  • Posts: 7374
  • Senior Mustachian
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #2 on: April 04, 2016, 08:32:58 AM »
Is there a reason to transfer things you want to keep owning?

If you are just moving things from Betterment, I believe they are just Vanguard funds anyway, so you can certainly transfer them without selling them. Then you can dump the Betterment fees.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 4944
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #3 on: April 04, 2016, 08:39:11 AM »
That's rather a good point I hadn't thought of ("want to keep owning"). I like simplicity, and so I'd want to be rolling into a three-fund (or four-fund) portfolio anyway, but then I'd definitely have to deal with capital gains. Of course, if I move them now, "in kind", I can wait until I'm sure they've been held long enough to be long-term rather than short-term.

Here's the actual portfolio breakdown, as Betterment has set it up:
US Total Stock Market: VTI
17.10%
US Large-Cap Value: VTV, IVE
17.00%
US Mid-Cap Value: VOE
5.50%
US Small-Cap Value: VBR
4.80%
Developed Markets: VEA, SCHF
38.70%
Emerging Markets: IEMG
11.90%
Municipal Bonds: MUB
2.70%
US Corporate Bonds: LQD, VCIT
0.30%
International Bonds: BNDX
1.20%
Emerging Markets Bonds: VWOB, EMB
0.80%

I'm not sure I'd want this level of complexity. For me, "total us stocks admiral share", "total us bonds", and "international stocks" is probably enough for me. Something like 60%, 10%, 30%. (I need to get more precise with this before I start balancing...)
« Last Edit: April 04, 2016, 08:42:18 AM by neogodless »

forummm

  • Walrus Stache
  • *******
  • Posts: 7374
  • Senior Mustachian
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #4 on: April 04, 2016, 08:50:36 AM »
Have you looked to see how much capital gain you have in total if you sold everything? It may not be very much. And depending on your income, you may not owe any tax even if there is a gain. The capital gains tax rate is 0% for income in the 15% and below brackets.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 4944
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #5 on: April 04, 2016, 09:09:55 AM »
Betterment does estimate tax impact when you withdraw, but since it just reinvested dividends, it won't tell me today. It says it'll tell me tomorrow :)

I am probably putting too much thought into this. While I haven't made a deposit to this particular account in a little over a year, because of their "tax-loss harvesting", I suspect some things have been held less than that. But looking at my records, I'm not sure this made money, overall. My marginal rate is likely still 25% even after 401K and deductions, but I think I might just bite the bullet.

jh830011

  • 5 O'Clock Shadow
  • *
  • Posts: 3
  • Age: 63
  • Location: Richmond, VA
  • Jeff in Virginia
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #6 on: April 04, 2016, 05:25:00 PM »
Consider a transfer-in-kind to move what you have to Vanguard.  Once they are in your brokerage account at Vanguard, you can work on consolidating.  I am not too familiar with Betterment but I seem to remember that they use mostly Vanguard ETFs. If so, there are no trading commissions if bought or sold from a Vanguard brokerage account.  You will want to double-check that. 

The transfer suggestion is what I did when I moved my stuff to Vanguard. 
Hope it helps, along with other good suggestions posted.

pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8927
  • Age: 67
  • Location: The Villages, Florida
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #7 on: April 04, 2016, 05:50:21 PM »
It depends on the assets, but yes, it is possible to transfer "in kind".

https://investor.vanguard.com/account-transfer/other-questions

a1smith

  • Bristles
  • ***
  • Posts: 360
  • Location: 44 15.478N, 082 50.088W
Re: Can you transfer investments (i.e. to Vanguard) without selling them?
« Reply #8 on: April 04, 2016, 06:25:39 PM »
I checked the ACAT system and Vanguard Marketing Corporation is listed but Betterment is not.  If found this on http://support.bettermentinstitutional.com/customer/portal/articles/1996300-do-you-support-acats-?b_id=9043&t=521859

Quote
We support ACAT transfers in of the ETFs from which our portfolios are constructed. Due to our clearing structure we are not currently able to support ACATS out, but clients can transfer their securities from Betterment in-kind via a direct transfer facilitated through DTC.
« Last Edit: April 04, 2016, 06:28:17 PM by a1smith »