Author Topic: Buying Vanguard index funds from another broker  (Read 6488 times)

FrugalFreddyFingers

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Buying Vanguard index funds from another broker
« on: September 09, 2014, 02:32:11 AM »
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« Last Edit: June 15, 2018, 02:55:09 AM by misterlewis »

bluecheeze

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Re: Buying Vanguard index funds from another broker
« Reply #1 on: September 09, 2014, 03:42:01 AM »
I like option 2.

Selling your USAA funds might incur a short term cap gains (higher tax rate)- unless of course you have owned all shares >1year.

In the base case just open up a personal vanguard account- it's easy and I don't think you have to fund it immediately- just say you will send the money via check and as soon as you get 3k invest in something electronically.  Once you hit long term cap gains in USAA you could elect to move it over to vanguard for simplicity or you could just leave it there to grow....up to you but you would basically be taking a tax penalty to move it- maybe there is a way around this through a direct tansfer? (vanguard initiates the transfer with you so the check is never written to you- you would need to talk to a vanguard rep about your options- I know this is how a 401k rollover works).

This is all assuming it is a taxable fund not a Roth/Trad IRA

matchewed

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Re: Buying Vanguard index funds from another broker
« Reply #2 on: September 09, 2014, 05:54:23 AM »
Outside of the Vanguard expense ratios and the commission, are there any other fees associated with this account? Extra expense ratio's from USAA or account maintenance fees? This will influence what action should be taken as you need to calculate those fees over the time. The commissions are sunk costs and are irrelevant to the discussion now. All that matters is how much you're paying going forward compared to taxes paid if you were to sell. Find the break point (when fees out weigh taxes) and that tells you when to sell.

johnny847

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Re: Buying Vanguard index funds from another broker
« Reply #3 on: September 09, 2014, 06:18:21 AM »
Transfer the funds using ACAT. This has no tax implications. USAA may assess an outgoing ACAT fee, I'm not sure about that.

alwayslearning

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Re: Buying Vanguard index funds from another broker
« Reply #4 on: September 09, 2014, 07:39:06 AM »
Great post, MisterLewis. I have a similar question, except mine was moving USAA Roth to Vanguard. Does it make any difference being a ROTH?

I was wondering if it would be better to go directly to Vanguard or through USAA. Your post helped me realize the fees with the USAA option.

Thanks for posting!

matchewed

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Re: Buying Vanguard index funds from another broker
« Reply #5 on: September 09, 2014, 08:09:49 AM »
Great post, MisterLewis. I have a similar question, except mine was moving USAA Roth to Vanguard. Does it make any difference being a ROTH?

I was wondering if it would be better to go directly to Vanguard or through USAA. Your post helped me realize the fees with the USAA option.

Thanks for posting!

Yes it does make a difference with a Roth. The funds in a Roth can be sold willy nilly* as they are not taxable events. Then you can just do a rollover to Vanguard.

*However you'd have to be cautious as they could have fees associated with the buying and the selling.

alwayslearning

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Re: Buying Vanguard index funds from another broker
« Reply #6 on: September 09, 2014, 08:16:26 AM »
Great post, MisterLewis. I have a similar question, except mine was moving USAA Roth to Vanguard. Does it make any difference being a ROTH?

I was wondering if it would be better to go directly to Vanguard or through USAA. Your post helped me realize the fees with the USAA option.

Thanks for posting!

Yes it does make a difference with a Roth. The funds in a Roth can be sold willy nilly* as they are not taxable events. Then you can just do a rollover to Vanguard.

*However you'd have to be cautious as they could have fees associated with the buying and the selling.

By "they" do you mean Vanguard or USAA? Great to know! Thanks for the reply!

matchewed

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Re: Buying Vanguard index funds from another broker
« Reply #7 on: September 09, 2014, 09:57:40 AM »
Great post, MisterLewis. I have a similar question, except mine was moving USAA Roth to Vanguard. Does it make any difference being a ROTH?

I was wondering if it would be better to go directly to Vanguard or through USAA. Your post helped me realize the fees with the USAA option.

Thanks for posting!

Yes it does make a difference with a Roth. The funds in a Roth can be sold willy nilly* as they are not taxable events. Then you can just do a rollover to Vanguard.

*However you'd have to be cautious as they could have fees associated with the buying and the selling.

By "they" do you mean Vanguard or USAA? Great to know! Thanks for the reply!

By "they" I mean the action of selling a fund within a Roth account.

The steps as I said would go something like this. Open an account at Vanguard and initiate a rollover through Vanguard. They will literally take care of the rest for you by contacting USAA and selling your holdings and transferring the money to your Vanguard account where you can just buy the same funds you used to own in Vanguard. https://investor.vanguard.com/401k-rollover/account-transfers

johnny847

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Re: Buying Vanguard index funds from another broker
« Reply #8 on: September 09, 2014, 11:11:15 AM »
I'm confused as to why everybody is talking about selling funds. You can just do a direct transfer. Since the OP only holds Vanguard funds, Vanguard will accept them without having to liquidate them before the transfer.

The transfer has no tax consequences whatsoever. There may be an outgoing ACAT (transfer of funds) fee at USAA, but there is no receiving ACAT fee at Vanguard as far as I am aware.

beltim

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Re: Buying Vanguard index funds from another broker
« Reply #9 on: September 09, 2014, 11:20:31 AM »
You could also just buy USAA's index fund which is almost as cheap as Vanguard's.  I find USAA's support and customer service to be vastly better than Vanguard's, and that would prevent you from having to open an entirely separate account, but your mileage may vary.

beltim

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Re: Buying Vanguard index funds from another broker
« Reply #10 on: September 09, 2014, 01:08:29 PM »
Thanks for sharing all of your knowledge! I will be out of town for a week or so, but I plan on getting in touch with vanguard, if they do a direct transfer, then that is the option I will likely go with.

I agree with you belting, usaa has by far the best costumer service, that is the main reason I use them for car and renters insurance and my banking needs. In this instance, I have explored usaas funds, and do have my Roth and my wife's through them in a usaa fund, but for my taxable portfolio I am pretty committed to the vanguard funds.

Just out of curiosity, why do you want a different situation for your taxable portfolio?