Author Topic: Roll over active SEP to Vanguard?  (Read 2557 times)

Isriam

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Roll over active SEP to Vanguard?
« on: May 19, 2015, 06:56:28 PM »
My wife has a SEP IRA with State Farm.  She is invested in their "life path 2040" fund, that has 6% growth since inception, and 1.65% expenses.

Is it possible to roll this over to a new Vanguard SEP IRA and leave her account at state farm active for her employer to continue to contribute to?  I want to make sure it doesn't get closed.  I believe the IRS allows a roll over once a year for sep ira to sep ira.

https://www.statefarm.com/finances/mutual-funds/investment-resources/price-performance-distributions/state-farm-fund-performance

Performance (%)       YTD   1YR      3YR   5YR     10YR   Inception Date     Gross Expense Ratio   Net Expense Ratio
Legacy A @ NAV      3.71   6.83  9.67   8.73     5.50      5/9/2003                    1.63                            1.17

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1437
Re: Roll over active SEP to Vanguard?
« Reply #1 on: May 19, 2015, 07:25:14 PM »
You should be able to do that since it is a SEP*.  Its a trustee to trustee transfer.  Now you want to make 200% sure the old SEP doesn't close in the process.  The best way to avoid this is to do a direct partial transfer.  The partial is important because that makes sure you only move 'part' of the account.  I wouldn't cut it to close, don't try to get to the penny.  Transfer 90% of it.  That way a small market fluctuation mid transfer doesn't cause it to turn into a 100% transfer or you can do an in kind transfer based on the number of 'shares' and not dollars.


Step 1:  Call Vanguard.  If there is confusion about whether you can do it they can probably call State Farm with you and they will probably know which questions to ask.

*  You should be able to do it since it is a SEP.  You would likely not be able to do this with a SIMPLE, 403b, 401k, 457, etc. because they can only move after you leave employment.

JumpJ

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Roll over active SEP to Vanguard?
« Reply #2 on: May 19, 2015, 10:06:43 PM »
Indexer nailed it, I would second calling Vanguard as the process for the trustee to trustee transfer is fairly hard to figure out from the Vanguard website and they will get it all dialed up.

I just did a SARSEP transfer from Charles Schwab to Vanguard.  It was 100% easy over the phone and took about 2 weeks to get the funds moved.  I did the exact amount as I transferred the amount in Charles Schwab's cash funds (whatever they call them) versus transferring "securities" so there was no issue.  They zapped out the cash and a $25 fee and I was off to Vanguard.

One wrinkle I had was that my Chuck account had a different name than my Vanguard account (middle initial versus full middle name) so I had to do a name change form which required a bank medallion guarantee and had to be mailed in.  Also the tranfer request had to be mailed in but that is broker specific so you may or may not have to mail something.  Glad it got done, love having it at Vanguard versus Chuck!

Isriam

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Re: Roll over active SEP to Vanguard?
« Reply #3 on: May 20, 2015, 06:12:04 AM »
Thank you guys very much.  What are your thoughts on the fund posted above?  Looks pretty terrible to me?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: Roll over active SEP to Vanguard?
« Reply #4 on: May 20, 2015, 07:57:39 AM »
Thank you guys very much.  What are your thoughts on the fund posted above?  Looks pretty terrible to me?

Yes, that fund has a terrible expense ratio. Vanguard's is 0.18%. If you stayed with the fund above, you'd have tens or hundreds of thousands of dollars eaten away by fees, depending on how much you invested in it and for how long.

https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost
https://investor.vanguard.com/mutual-funds/low-cost