Author Topic: Moving to Vanguard, but how  (Read 4001 times)

scintilates

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Moving to Vanguard, but how
« on: July 28, 2015, 08:32:21 PM »
Hey, relatively newbie investor here, running a plan by you all so that I don't do something silly.

I recently made the decision to move my taxable investments from Betterment to Vanguard.  Right now I'm trying to figure out whether it makes sense to try to transfer the assets in kind, or just to cash out and re-invest in vanguard.

Details:
Current assets are ~55k, stock-only betterment allocation
Want to change allocation somewhat in vanguard, but ETFs would overlap significantly
All assets would fall under short term gain/loss (<1 year).  Overall portfolio is at a slight loss currently
I live/work in the US

Main questions:
What are the tax basis/wash sale implications if I cash out Betterment, then buy into Vanguard?  (Would probably be buying some of the same ETFs I just sold, but not an exact match to the betterment portfolio)
With the market being at medium volatility right now, is it "risky" to take money out of the market rather than doing an in kind transfer?
Are there any major considerations beyond those two?

Things I don't want this post to devolve into:
Betterment vs Vanguard (vs Wealthfront)
Asset Allocation Strategy

Thanks!

Spork

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Re: Moving to Vanguard, but how
« Reply #1 on: July 28, 2015, 08:48:34 PM »
I'm basically gonna tell you I don't know.  But: Vanguard is REALLY HELPFUL.  If you were to just call them, they will likely hold your hand, make a 3 way call to Betterment and make it happen.   

I just did what I'd consider a more-complicated-than-usual (but not THAT complicated) 401k rollover.  They handled everything except answering my security questions, etc.

MDM

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Re: Moving to Vanguard, but how
« Reply #2 on: July 28, 2015, 09:04:31 PM »
I'm basically gonna tell you I don't know.  But: Vanguard is REALLY HELPFUL.  If you were to just call them, they will likely hold your hand, make a 3 way call to Betterment and make it happen.   
+1

Looks like good advice to me.

Regarding "...buying some of the same ETFs I just sold", that is exactly what a wash sale is.  Doesn't matter if you do it at two different brokers.

forummm

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Re: Moving to Vanguard, but how
« Reply #3 on: July 29, 2015, 05:58:36 AM »
It's easy to avoid wash sales. I would sell, take the loss for your tax deduction, and then move the cash to Vanguard (via your checking account probably). That would be a very easy thing to do. What are you invested in now? We can give you similar funds that aren't the same funds to avoid wash sale issues.

astvilla

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Re: Moving to Vanguard, but how
« Reply #4 on: July 29, 2015, 06:56:31 AM »
I wanted to move my Roth IRA from Fidelity to Vanguard.  I called up Vanguard and they actually handled it for me.  On their side, they requested a transfer of assets from Fidelity to a Vanguard account I had already made (but not deposited yet).  Give it some time and then finish, 5500 in Vanguard now, zero in Fidelity. 

Expect the other company moving assets from to give some pushback or not rush though.  I don't think they can refuse a request from another brokerage like Vanguard by law.  Pretty simple.  I find calling directly to be helpful for solving some problems.

Hope this helps.

forummm

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Re: Moving to Vanguard, but how
« Reply #5 on: July 29, 2015, 08:15:46 AM »
I wanted to move my Roth IRA from Fidelity to Vanguard.  I called up Vanguard and they actually handled it for me.  On their side, they requested a transfer of assets from Fidelity to a Vanguard account I had already made (but not deposited yet).  Give it some time and then finish, 5500 in Vanguard now, zero in Fidelity. 

Expect the other company moving assets from to give some pushback or not rush though.  I don't think they can refuse a request from another brokerage like Vanguard by law.  Pretty simple.  I find calling directly to be helpful for solving some problems.

Hope this helps.

For an IRA, you typically do want the two firms to handle it directly. For a taxable account where you want to sell all the funds you have anyway, it doesn't really make much difference.

Wolf359

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Re: Moving to Vanguard, but how
« Reply #6 on: July 29, 2015, 09:37:45 AM »
I wanted to move my Roth IRA from Fidelity to Vanguard.  I called up Vanguard and they actually handled it for me.  On their side, they requested a transfer of assets from Fidelity to a Vanguard account I had already made (but not deposited yet).  Give it some time and then finish, 5500 in Vanguard now, zero in Fidelity. 

Expect the other company moving assets from to give some pushback or not rush though.  I don't think they can refuse a request from another brokerage like Vanguard by law.  Pretty simple.  I find calling directly to be helpful for solving some problems.

Hope this helps.

For an IRA, you typically do want the two firms to handle it directly. For a taxable account where you want to sell all the funds you have anyway, it doesn't really make much difference.

Opposite.  For an IRA, it's okay to sell all the funds you have, since there are no tax consequences.  You can then invest the funds however you want. 

For a taxable account, selling may generate taxable events.  It's better to do an in-kind transfer, especially because Betterment uses mostly Vanguard ETFs anyways.  You just hold them at Vanguard indefinitely, or unless you need to rebalance out of them.  You can sell if you're at a loss and you don't have any offsetting purchase within 30 days (read up on the wash sale rules.) 

For everything you do in the investment accounts, minimize the costs.

forummm

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Re: Moving to Vanguard, but how
« Reply #7 on: July 29, 2015, 10:26:21 AM »
I wanted to move my Roth IRA from Fidelity to Vanguard.  I called up Vanguard and they actually handled it for me.  On their side, they requested a transfer of assets from Fidelity to a Vanguard account I had already made (but not deposited yet).  Give it some time and then finish, 5500 in Vanguard now, zero in Fidelity. 

Expect the other company moving assets from to give some pushback or not rush though.  I don't think they can refuse a request from another brokerage like Vanguard by law.  Pretty simple.  I find calling directly to be helpful for solving some problems.

Hope this helps.

For an IRA, you typically do want the two firms to handle it directly. For a taxable account where you want to sell all the funds you have anyway, it doesn't really make much difference.

Opposite.  For an IRA, it's okay to sell all the funds you have, since there are no tax consequences.  You can then invest the funds however you want. 

For a taxable account, selling may generate taxable events.  It's better to do an in-kind transfer, especially because Betterment uses mostly Vanguard ETFs anyways.  You just hold them at Vanguard indefinitely, or unless you need to rebalance out of them.  You can sell if you're at a loss and you don't have any offsetting purchase within 30 days (read up on the wash sale rules.) 

For everything you do in the investment accounts, minimize the costs.

That's not different than what I said. For an IRA, the two firms should handle it so the money goes from one to the other without accidentally causing a taxable or penalty event. For a taxable account, the OP already stated that they wanted to sell everything to get the capital loss.