Author Topic: Is it possible to open an IRA with a Vanguard Admiral Fund?  (Read 3877 times)

not_a_trex

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Is it possible to open an IRA with a Vanguard Admiral Fund?
« on: December 31, 2013, 10:32:04 AM »
I've been lurking around this forum for about a week or two and I've realized, thanks to you guys, that I haven't been taking advantage of an IRA. I would like to open one, and I would like to invest in a Vanguard Admiral Fund (VTSAX). The problem is that I can contribute a max of $5,500 for 2013, whereas Admiral funds require a minimum of $10,000 to contribute.

Is there a way around that? If not, should I open an IRA and contribute to another fund for 2013, contribute again for 2014, and then move those funds into an Admiral Fund?

senecando

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #1 on: December 31, 2013, 10:33:25 AM »
If you contribute to the investor shares, you'll be upgraded to the Admiral shares when you reach 10k. Start with VTSMX.

Edit: And welcome to the forums!
« Last Edit: December 31, 2013, 10:35:42 AM by senecando »

Eric

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #2 on: December 31, 2013, 12:16:30 PM »
It seems like your timing is pretty good here.  Contribute $5500 today for 2013.  Contribute $5500 tomorrow for 2014.  Buy your admiral shares on 1/2/14.

Trip

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #3 on: December 31, 2013, 12:46:44 PM »
Just so you know, unless the rules have changed from last year, that you should be able to contribute $5,500 for 2013 up until tax day.  So as long as you earn $4500+ by tax day this coming year, you can contribute the $10,000 needed in a single day during 2014 to become eligible for Admiral Shares

not_a_trex

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #4 on: December 31, 2013, 02:06:11 PM »
Thanks. I bought shares of VTSMX today and will buy again tomorrow. After that, hopefully I can transfer.

the fixer

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #5 on: December 31, 2013, 05:23:52 PM »
Yes you can. On the "balances and holdings" page there will be a big yellow box at the top of the list of funds held in the IRA, containing a link that says "Convert to Admiral Shares." It's really easy.

I know this so well because I see the same thing for my SEP-IRA. The balance just recently got above $10k so now I can convert.

kyleaaa

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #6 on: January 03, 2014, 03:51:51 PM »
To be clear, you don't TRANSFER investor shares into admiral shares. You convert. In an IRA it's not a huge deal but in taxable accounts I've heard horror stories of people running up sizable tax bills by transferring when they should have converted.

Just buy the $5,500 worth of investor shares and click the "convert" button whenever the account gets to $10,000 be that a week from now or a year. There's no real advantage in clumping things together in order to open with admiral shares from the start. The total ER savings is going to be on the order of about 15 cents either way. You've probably spent more than that on electricity just browsing this thread!

golfer44

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Re: Is it possible to open an IRA with a Vanguard Admiral Fund?
« Reply #7 on: January 03, 2014, 07:49:21 PM »
To be clear, you don't TRANSFER investor shares into admiral shares. You convert. In an IRA it's not a huge deal but in taxable accounts I've heard horror stories of people running up sizable tax bills by transferring when they should have converted.

Just buy the $5,500 worth of investor shares and click the "convert" button whenever the account gets to $10,000 be that a week from now or a year. There's no real advantage in clumping things together in order to open with admiral shares from the start. The total ER savings is going to be on the order of about 15 cents either way. You've probably spent more than that on electricity just browsing this thread!

Interesting, thank you for posting! I had been wondering about this.