In-kind transfer from Betterment to Vanguard – DENIED

[nkt0]

I initiated an in-kind transfer of my traditional IRA from Betterment to Vanguard. I only have $3k in the account right now, so I didn't need a medallion signature or any funky process. However, I received a call today from Vanguard saying that Betterment doesn't do in-kind transfers. So are my only options to cash out my traditional IRA, pay taxes on the $3k, then have to use up part of my annual contribution to re-contribute those funds??? WTF Betterment?!?

[nalor511]

No. You call vanguard and tell them you want to roll a Betterment IRA into your new (or existing) vanguard IRA. You call Betterment to initiate a direct rollover to vanguard. They will cash out the funds and write a check to vanguard directly, and you won't pay taxes as long as the funds go into a qualified IRA at vanguard.

[Indexer]

First, sorry to hear about this. There have been several topics on here about how Betterment makes it really hard to transfer accounts. I can say that you shouldn't have to take a distribution, or pay taxes. You can transfer IRA to IRA, but it sounds like an in-kind transfer isn't an option.

Call Vanguard back. If they can't do an in-kind transfer they can probably still complete a direct transfer. Instead of investments coming over in kind the money comes over as cash and goes into an IRA money market.

If that doesn't work you could do an indirect rollover, which is very similar to what Nalor described, but Betterment will make the check out to you and you have 60 days to get it into an IRA. You can only do this once per year. As long as you get the money into an IRA within 60 days there are no taxes due.

[nkt0]

Thanks, y’all. I’ll give Vanguard a call back.

[jacoavluha]

I didn’t have any problems with an in kind transfer out of Betterment. (Not to Vanguard.) This was a taxable brokerage account.

There’s not much point in worrying about an in kind transfer for an IRA. No basis to worry about. Just instruct them to liquidate and transfer cash and then invest in whatever you want at Vanguard. No tax consequences.

Better for you anyway. An in kind Betterment transfer would have several, maybe as many as a dozen, non-Vanguard ETFs which you’d probably have to pay trading fees to get out of at Vanguard.