The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: Scottma on November 05, 2012, 02:56:19 AM

Title: Move American Funds to Vanguard?
Post by: Scottma on November 05, 2012, 02:56:19 AM
Hello all,

I currently have about $4k in an American Funds roth IRA that I have come to realize is paying far too high an administrative fee. I also have a roth 401k through my employer, and I'd love to transfer my balance from American Funds to it. I've tried searching google, but can't seem to find what the disadvantages may be for such a move...such as what taxes I would I would owe, and if I'm even allowed to make such a move?

As you can see I'm a bit of a newbie, so any help is very much appreciated!
Title: Re: Move American Funds to Vanguard?
Post by: Will on November 05, 2012, 08:04:45 AM
I think your best bet would be to contact whoever the administrator of your work 401k is and talk to them about doing a rollover.  I don't believe rollovers have any tax consequences if they are going from same type to same type (in your case, Roth to Roth).  If your work's 401k administrator can't tell you, I'd call Vanguard directly; they are very helpful!
Title: Re: Move American Funds to Vanguard?
Post by: KingCoin on November 05, 2012, 08:47:50 AM
Policies on rolling IRAs into 401k differ. You'll have to contact your plan administrator to find out if it's possible. There should be no tax consequences.

Better yet, why not just transfer your IRA to a broker that chargers no administrative fee? That way, you'll get the full investing flexibility of an IRA without the restrictions of your 401k.
Title: Re: Move American Funds to Vanguard?
Post by: Scottma on November 05, 2012, 09:59:35 AM
Good point, KingCoin! Hadn't thought of that. Any recommendations?
Title: Re: Move American Funds to Vanguard?
Post by: KingCoin on November 05, 2012, 11:06:03 AM
You could use Vanguard if you don't mind being restricted to their funds. You could use a standard retail broker like E*trade which only charges for trades rather than administration.

It's also worth noting that if you roll a Roth IRA into a 401k, you may not be able to roll it back into a Roth without tax implication. Obviously, money already in a Roth is much preferred to money in a 401k.