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Learning, Sharing, and Teaching => Investor Alley => Topic started by: TheThirstyStag on December 27, 2016, 02:58:36 PM

Title: Transferring both taxable and tax-exempt accounts to Vanguard - Q
Post by: TheThirstyStag on December 27, 2016, 02:58:36 PM

I am in the process of firing a family member's FA due to high fees and migrating her IRA, Roth IRA, and taxable/non-qualified holdings into Vanguard.  I plan to run a three-fund portfolio for all three of them.  I have a few questions about the process:

1) She holds about $40k in a non qualified brokerage through Ameriprise.  Is it better to liquidate these assets by selling it all, then just buying vanguard index funds after the check clears?  Or should this be done concurrently when transferring the IRA and Roth IRA? (it sounds to me like this option would make me subject to vanguard's brokerage service fees and commissions and it's not enough to qualify for Voyager status)

2) She holds about $40k in a roth and $140k in an IRA through Ameriprise, invested in a silly casserole of over 10 actively-managed funds each.  When I initiate the transfer through Vanguard, is this an "account transfer"?  I want to transfer all of these assets into a three-fund portfolio, so am I not doing an "in-kind transfer"? 

I want to play my cards right to avoid too many penalties/fees, etc.

Thanks in advance.

Title: Re: Transferring both taxable and tax-exempt accounts to Vanguard - Q
Post by: TheThirstyStag on December 28, 2016, 12:14:46 PM

Just wanted to follow up on my own inquiry:

I spoke with Vanguard - what amazing customer service.  It looks like my best bet is to convert all holdings in both IRAs and the taxable account to a cash equivalent, assuming the fees to do this (if any) would be much less than Vanguard's per-fund transfer fee of $35 or $20 (Voyager status).  They could then do an in-kind transfer of all three accounts for free, and I would just deal with the capital gains/losses of the taxable account transactions.

Title: Re: Transferring both taxable and tax-exempt accounts to Vanguard - Q
Post by: seattlecyclone on December 28, 2016, 08:29:09 PM

For the IRAs, taxes aren't an issue. You'll want to get out of your high expense ratio funds soon one way or another, so liquidate in whichever account will have a lower transaction fee to do so.

For the taxable account, there could be some capital gains taxes to worry about. With a $40k balance the gain would be less than that (possibly much less if the shares were purchased relatively recently), so it's probably not much of a concern, at least not compared to the high fees your mom is paying on the existing funds. Since we're at the end of the year it might be best to sell half of it this year and half of it just after New Year's to spread the capital gains across two tax years.