Author Topic: IRA transfer, move to Roth, backdoor questions  (Read 1115 times)

TheStachery

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IRA transfer, move to Roth, backdoor questions
« on: June 30, 2016, 10:05:18 AM »
I have ~$2500.00 in a Fidelity Traditional IRA.  I *think* I want to accomplish two things.
1) move the money to Vanguard (not sure if it make sense to move it)
2) move it from a traditional IRA to a backdoor Roth. (this i want to do for sure)

Should I convert the money to a Roth at Fidelity, then move it to the Vanguard account, or move the money to Vanguard then convert to a Roth?  Does it matter?  I don't have any accounts currently at Vanguard.  The Fidelity account is in cash and not invested at this time. 
Other side notes:
I never used the backdoor method before
I'm over the IRS limit, so I have to use the backdoor method.
I max out all out pre-tax accounts.
I have a 401k, no other IRAs at this time.

any advice would be very much appreciated.

Thanks!

dandarc

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Re: IRA transfer, move to Roth, backdoor questions
« Reply #1 on: June 30, 2016, 10:14:21 AM »
I'd move it to Vanguard and then convert - I've always had good service from them.  Shouldn't really matter where you do the conversion though.

TheStachery

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Re: IRA transfer, move to Roth, backdoor questions
« Reply #2 on: June 30, 2016, 10:45:44 AM »
If Fidelity offers Vanguard funds, does it make sense to even move it to Vanguard?

dandarc

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Re: IRA transfer, move to Roth, backdoor questions
« Reply #3 on: June 30, 2016, 11:17:43 AM »
Fees.  This actually hits you 2 ways:

1.  Vanguard Funds are Transaction-Fee funds at Fidelity.  So every time you buy or sell, you're paying $49.95, if I'm reading the fine print right.

2.  Investor-class funds only - no admiral shares.  So your annual expense from the fund is higher.  Example - VFINX is an S&P 500 fund you can buy at Fidelity.  It has a 0.16% expense ratio.  At Vanguard, once you have $10K in the fund, you can get Admiral Shares.  Same underlying investments, but a lower fee - 0.05%.

If you want to stay at Fidelity, use their Spartan Funds.  If you want Vanguard funds, cheapest to move your money to Vanguard.  If you want both, have an account at each.