SD401K @ Schwab: Do I Switch to Vanguard?

[Todd]

I have a Self-Directed 401K (I am self-employed) with all funds invested at Schwab (SWTSX).

I've inquired at Vanguard - as I'd rather be invested there - however their method of holding funds seems so obtuse to me (I will explain below).

I am hoping that the MMM readership will have some thoughts, suggestions, insight, as I am a bit stumped.

SCHWAB

When setting-up the account, Schwab creates "sub-accounts" for each account / account holder. So, this means that I have a handful of sub-accounts:

* Rollover (from previous 401k): checkbook control, ~ $50K
* 401k Account: Just started funding in 2015
* ROTH 401k Account: ~ $40K in this account (not funding this at present)
* Profit Share Account: We will use the Profit Share aspect in 2015

AND.....I have all but the Rollover account for my wife established as well (!).

As you can see, I have four accounts that are all housed under the (umbrella) of my SD401K plus three accounts for my wife, thus seven distinct accounts.

Now, Schwab has been fine, and SWTSX is as close as I can get to VTSAX with Schwab.  Maybe that is good enough?

The crux here, is that Vanguard, in conversation, has said I can transfer it all, however they dump the entirety into a single account, ie; there is no partition between 401K / ROTH 401K / Rollover / Profit Share....or any of my wife's accounts. It's all kind of one big pot with Vanguard...

1) How then, do I differentiate the wife's funds from mine, whether for the IRS or divorce court, or ______? (I don't plan on those things, but $#!+ happens).

2) And what about at distribution time? If I never contribute to the ROTH 401K again, how do I know how much those dollars earned vs the taxable dollars?  Further, if I use my ROTH dollars to do a deal (ie; I've used it in the past for small hard money loans) - how do I demonstrate earnings from it, versus the taxable account earnings?

It is likely that I am overthinking this, or missing the forrest for the trees, and I am hoping to get some clarity.

Again, I've been pleased w Schwab, but would feel better at Vanguard (Silly, maybe? But Vanguard is owned by the shareholders, and Schwab cannot say the same).

Your thoughts / input are TREMENDOUSLY appreciated, with many thanks in advance.

If you need more info, or if I haven't been clear, please let me know & I will try to provide more info.

Thank you again,

Todd

[velocistar237]

The crux here, is that Vanguard, in conversation, has said I can transfer it all, however they dump the entirety into a single account, ie; there is no partition between 401K / ROTH 401K / Rollover / Profit Share....or any of my wife's accounts. It's all kind of one big pot with Vanguard...

I have several kinds of accounts (Rollover, Traditional, Roth, taxable) under a single login in Vanguard, so I don't know what the Vanguard representative meant. My wife has her accounts under her own separate login. I don't know whether we could move hers under my login.

[rugorak]

I would just inquire further with Vanguard. I too have multiple kind of accounts. It sounds like there may be just some miscommunication. If you tried to do it all at once with 1 check then yes, it would just go in 1 account. But what should be done is each account gets moved over on its own. So each of the 4 would be a separate transaction so that it can be tracked for tax purposes. And as well each for your wife would be separate as well. A pain but necessary given our tax system.

[forummm]

I have 3 separate Vanguard taxable accounts and 2 separate Roth accounts at Vanguard. I also have access to my wife's Roth. I could also add brokerage accounts (Roth, TIRA, or taxable) if I wanted to get ETFs or individual stocks. So I don't understand why you can't have multiple accounts.

Maybe what you could do is roll over each portion separately and start new account with each segment of money you're trying to keep separate.

Or you could just leave your stuff at Schwab (0.1% isn't terrible) and start accounts at Vanguard for your new contributions.

[velocistar237]

Vanguard has a "concierge service" to help with these sorts of transitions. They were very helpful when I went through the process once. It did take a while, though, to get everything done.

[Todd]

I will connect with the "Concierge" - thank you for the suggestion.

From the commenters (Velocistar237 / Forummm / Rugorak) it sounds as if you all have Vanguard accounts that are "partitioned" as mine are at Schwab.

It would make sense that I may have not explained it well to the representative &/or they may have misunderstood.

THANK YOU for the helpful comments - I will let you know how it turns-out.

Todd

[forummm]

From the commenters (Velocistar237 / Forummm / Rugorak) it sounds as if you all have Vanguard accounts that are "partitioned" as mine are at Schwab.

My accounts are not "partitioned". They are separate accounts with different account numbers. But they all show up in my portfolio when I log in. Perhaps this distinction in terminology was confusing the Vanguard support rep.

[Todd]

Forummm...

Yes! I have to say, the "partitioned" verbiage is my own.

I agree, each account of mine has a different account number - all of which are under the umbrella of my SD401K.

Hopefully with this correction in description, I will make better progress on switching from Schwab to Vanguard.

Thank you,

Todd

[milesdividendmd]

Nothing wrong with Schwab. Many of their cap weighted ETFs are cheaper than vanguard's. Plus no trading fees on their fee free ETFs.  And no minimum holding periods.

No point in switching over that I can see.

[clifp]

Nothing wrong with Schwab. Many of their cap weighted ETFs are cheaper than vanguard's. Plus no trading fees on their fee free ETFs.  And no minimum holding periods.

No point in switching over that I can see.

Schwab's customer service in my experience is significantly better than Vanguard.. In particular Vanguard isn't very flexible (as in the your example no all the funds are rolled over into a single pot.) Schwab reps, certainly at the Platinum level, are trained to find ways to make what you want happened as opposed to Vanguard, who tend to try to convince you that the Vanguard way is better.

For most asset classes, Schwab has a competitive index fund with similar cost and performance. (Realistically Vanguard tend to outperform Schwab by a couple of basis points or so.)  About the only thing I have been unable to find a Schwab that Vanguard offered was a low expense GNMA fund.

[Todd]

MilesDividendMD and ClifP:

I agree with you both about Schwab: they've been great to work with / thorough / pleasant in all of my transaction(s) with them.

By nature of my Solo401K - as I am the administrator and the custodian - Schwab (or any other brokerage firm), has no oversight / control or responsibility on my account.  Basically, they hold the money, and I do the work of investing, oversight and compliance.

With that said, I don't require awesome customer service from the company - just access to the funds that I want.  If I get awesome customer service in the process however, then that's icing on the cake.

Predominately dealing with Index funds, I've been invested mostly with the Schwab fund (SWTSX) without any issue.  I've also done some loans with the checkbook control aspect (and according to IRS rules) with other monies in the account.

At the end of the day, I suppose it is my personal feeling (ie; sense of control) by having my monies invested at Vanguard.

I am hopeful that using the concierge service will allow me to explain what I have at Schwab and get the same set-up at Vanguard (similar to what previous replies to my query indicated that they have).

If Vanguard cannot accomplish this, then I will continue-on at Schwab.

[aspiringnomad]

I'm very happy with Schwab. In many ways, I find Schwab to be better than Vanguard. For very low ER ETFs with no commission fees check out the following (descriptions off the top of my head so no guarantees):

SCHB (broad market index)
SCHD (dividend index)
SCHH (REIT)
SCHF (developed int'l)
SCHE (emerging int'l)

You can compile quite a diversified portfolio with extremely low expense ratios and no commission fees. Just stay away from their new robo investing product - requiring people to keep a significant percentage of their portfolio in cash and claiming to charge no fees is insulting and disappointing for an otherwise excellent brokerage.