Author Topic: Roth IRA VTSAX? Is it even possible? Newb Question  (Read 6410 times)

401Killer

  • Stubble
  • **
  • Posts: 129
Roth IRA VTSAX? Is it even possible? Newb Question
« on: March 26, 2018, 02:20:41 PM »
If the mininum buy amount for VTSAX is $10,000, how could someone purchase that for their Roth IRA that's limited to $5,500?

I've done some reading about the fund and several people have referenced that fund in their Roth IRA and I can't figure out how they did it.

 
« Last Edit: March 26, 2018, 02:23:55 PM by 401Killer »

Eric

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: On my bike
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #1 on: March 26, 2018, 02:25:43 PM »
Buy the investor shares version this year, VTSMX.  Next year, contribute another $5500.  Convert to VTSAX at that time.

Travis

  • Magnum Stache
  • ******
  • Posts: 3044
  • Location: South Korea
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #2 on: March 26, 2018, 02:26:59 PM »
VTSAX is an upgrade to VTSMX.  You start off with VTSMX which has a .14% ER and when you have $10,000 in the fund, Vanguard will automatically change you over to VTSAX which is the exact same fund with a .05% ER.

secondcor521

  • Magnum Stache
  • ******
  • Posts: 2947
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #3 on: March 26, 2018, 02:32:37 PM »
Another thing that can happen is someone can do a conversion of some money from their traditional IRA to their Roth IRA.  There is no dollar limit to conversions but they do result in ordinary taxable income.

So one way would be for someone to contribute $10,000 to their 401(k) at work for 20 years, retire, roll their 401(k) to a traditional IRA, then convert some of that to a Roth IRA.

There are probably other ways with other types of retirement plans and rollovers.

Another less common way is to contribute $5K to a Roth IRA 10 years ago, buy a stock that has done well over those years and then sell it to buy VTSAX.

robartsd

  • Magnum Stache
  • ******
  • Posts: 2903
  • Location: Sacramento, CA
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #4 on: March 26, 2018, 03:10:52 PM »
If you haven't made your 2017 contributions yet and want to make 2018 contributions right now, you can contribute up to $11,000 in a Roth IRA right now and buy VTSAX right away. You don't need $10,000 for each purchase - the minimum purchase amount for additional investments once you hold VTSAX is $1.

401Killer

  • Stubble
  • **
  • Posts: 129
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #5 on: March 27, 2018, 10:03:19 AM »
Thanks guys for the replies, I think I understand. There seems to be a few options to achive this. I may just do the VTSAX option when I am ready.

If I remember correctly I think that fund was a $3k buy in.

Do I have this correct with VTSAX, after the initial buy in of $10k, you can then invest any amount after that point into it? Just making sure.


Eric

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: On my bike
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #6 on: March 27, 2018, 10:45:34 AM »
Do I have this correct with VTSAX, after the initial buy in of $10k, you can then invest any amount after that point into it? Just making sure.

Yes.  Once you reach $10,000, you've then qualified for the lower expense ratio version of the fund.  You can invest in any increment after that.

Penn42

  • Bristles
  • ***
  • Posts: 267
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #7 on: March 27, 2018, 10:51:02 AM »
I passed 10k earlier this year in VTSMX.  Vanguard didn't switch to VTSAX automatically, but it was an easy switch on their website.

Wile E. Coyote

  • Stubble
  • **
  • Posts: 225
Re: Roth IRA VTSAX? Is it even possible? Newb Question
« Reply #8 on: March 27, 2018, 10:58:52 AM »
Buy the investor shares version this year, VTSMX.  Next year, contribute another $5500.  Convert to VTSAX at that time.

Also, if you haven't made a contribution for 2017, you could make both a 2017 and 2018 contribution before April 17, 2018.