Author Topic: Get out of your SIMPLE IRA  (Read 887 times)

Seradoc

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Get out of your SIMPLE IRA
« on: October 28, 2016, 01:31:29 PM »
I have an eight year old SIMPLE IRA with Vanguard and just noticed that I can do much better.  Maybe this will benefit someone else as well.

My SIMPLE IRA is restricted to "Investor Shares" instead of "Admiral Shares".  For the same S&P 500 index fund, this is the difference between a 0.16% and 0.05% expense ratio.  Otherwise, the underlying funds are the same.

Since my SIMPLE IRA is over 2 years old, I can rollover the entire amount to a Traditional IRA at any time without any tax implications.  The Traditional IRA will allow me to invest at lower cost.  Additionally, the Traditional IRA can be upgraded to a Brokerage Account to allow me to buy ETFs or stocks.

Even the 0.11% difference in the S&P 500 index fund cost erodes 1% of your total return every 10 years.

If you have under $50,000 at Vanguard, be aware that you need paperless statements to avoid other costs when pursuing this strategy.

themagicman

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Re: Get out of your SIMPLE IRA
« Reply #1 on: October 28, 2016, 02:16:31 PM »
Consider yourself very lucky with your previous simple IRA. I do not have any investing options under 2% expense ratio. Counting down the months until I have been in it two years!