Moving money from 1 Roth IRA to another Roth IRA to consolidate, pay penalty?

[astvilla]

So I have 2 Roth IRAs, can only contribute 2750.00 each, (total 5500) because I thought there were funds in each I wanted to be in. Now I just want it all under 1 broker (Vanguard). How do I move the money from Fidelity to Vanguard without getting penalty? It's warning me I'll pay penalty and asking whether to withhold federal tax. But I thought Roth IRA only tax gains if early, not contribution? The Fidelity Roth IRA is straight cash, hasn't been invested yet so no gains.

[Frankies Girl]

You're probably getting a standard notice if you're doing this through the website (movements and account queries do tend to get the automatic alerts/popups). I'd call Vanguard and ask them to move them "as is" without selling off or trading anything (send in the paperwork, they'll take care of the rest). Once both accounts are over to them, you should have no issue consolidating them into one account if they are both Roths. Again, should be a simple call to take care of it if they can't do it automatically during the transfer.

Or call Fid if they're both with them, get them to consolidate them (don't mention that you're moving if you're dead set to avoid getting caught up in the pitches), then move the one account - either way should be just a few phone calls and some minor paperwork.

[bacchi]

You want a trustee-to-trustee transfer. You won't receive a check and it is tax-free.

What FG wrote: Call Vanguard and have them do it.

[rmendpara]

Call Vanguard, they will happily help you give them more money to invest with them.

[Roots&Wings]

Vanguard will walk you through the account transfer so there are no penalties. 

I consolidated accounts (Roth IRA, SEP IRA, and taxable brokerage holdings) from Fidelity, Sharebuilder and individual mutual funds to Vanguard several years ago.  I recall filling out lots of forms, but nice having everything in one place now.

[Louisville]

You want a trustee-to-trustee transfer. You won't receive a check and it is tax-free.

What FG wrote: Call Vanguard and have them do it.

Even if there is some cock up and you do get sent a check, you can send it on immediately to Vanguard and there still will be no penalty. This happened to me me once.

[juuustin]

You won't pay a penalty, but it is very possible you will pay a fee.  I know first hand.  I moved a couple hundred bucks I had in a ShareBuilder Roth IRA I started in college to Fidelity and paid $40 in mandatory transfer fees.  I used Fidelity to initiate the transfer and ShareBuilder simply deducted the $40 from the amount.  No "penalty" per se, but on the small balance that I was transferring, it was a pretty big chunk.  I should have just withdrew it all and paid the penalty to be honest.  Lesson learned.

[neo von retorch]

You want a trustee-to-trustee transfer. You won't receive a check and it is tax-free.

What FG wrote: Call Vanguard and have them do it.

Even if there is some cock up and you do get sent a check, you can send it on immediately to Vanguard and there still will be no penalty. This happened to me me once.

Ha yes this happened to me less than a month ago. Worse, it was with a Simple IRA that you shouldn't move at all before 2 years is up. But I was able to send it back to them and get it all cleared up.

I also consolidated several other IRAs and most of them sent me a check - I did not have tax withheld. But when I move it into the other IRA, it's done "as a rollover" and you'll get the tax paperwork you need - i.e. it'll show up on taxes but you won't pay any penalties.

[skyrefuge]

Call Vanguard, they will happily help you give them more money to invest with them.

Argh, enough with the "call Vanguard"! It's not 1992 anymore. Vanguard will be even more happy (and, by extension, all of us Vanguard-owners will be happy too) if you use the very Internet-connected computer that you are already using.  Vanguard has created a whole page and process specifically for this purpose:

https://investor.vanguard.com/account-transfer/transfer-ira

[astvilla]

You won't pay a penalty, but it is very possible you will pay a fee.  I know first hand.  I moved a couple hundred bucks I had in a ShareBuilder Roth IRA I started in college to Fidelity and paid $40 in mandatory transfer fees.  I used Fidelity to initiate the transfer and ShareBuilder simply deducted the $40 from the amount.  No "penalty" per se, but on the small balance that I was transferring, it was a pretty big chunk.  I should have just withdrew it all and paid the penalty to be honest.  Lesson learned.

This is correct, you do pay a fee, in my case, I looked and got charged $50 fee by Fidelity for moving money from their Roth IRA to Vanguard, or maybe Vanguard charged idk it showed up on my Fidelity. Lesson learned, keep things together under 1 brokerage.

Unless I did something wrong, I did call Vanguard and they said they will handle and do automatic transfer. Asked for information to verify it's me and for account information from Fidelity. Fidelity did not like me leaving so charged $50 fee. Maybe that's hidden somewhere in the terms and conditions I guess so for anyone with Roth IRA with Fidelity, you will get charged a fee for moving money but not on the earnings from it. 

[TomTX]

$50 isn't that bad.  TD Ameritrade charged me even more to leave.

[Frankies Girl]

$50 isn't that bad.  TD Ameritrade charged me even more to leave.

UBS charged me two fees: $95 and $75 for a "transfer fee" and "account close fee," and American Funds hit me with something around $95 for leaving as well... so yeah, $50 is small potatoes.

[astvilla]

$50 isn't that bad.  TD Ameritrade charged me even more to leave.

UBS charged me two fees: $95 and $75 for a "transfer fee" and "account close fee," and American Funds hit me with something around $95 for leaving as well... so yeah, $50 is small potatoes.

yeah i wasn't expecting a fee, from most responses it'd sounded like it'd be free. $50 isn't exactly small potatoes lol but im okay with it. i just didn't want to leave the impression for future newbie readers like me that it's free. There is a small fee that can vary. It's not bad imo since i hardly spend any money as it is anyway.

[neo von retorch]

American Funds charged me $25 for closing my account.