Author Topic: Transferring taxable investments from Vanguard to Fidelity?  (Read 1316 times)

Geographer

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Transferring taxable investments from Vanguard to Fidelity?
« on: September 10, 2018, 03:42:35 PM »
I recently got married and my wife and I plan to merge our Vanguard taxable investment holdings into a joint brokerage account. We've been pretty interested in the new Fidelity zero fee funds being offered. Since the only two holdings we have in our Vanguard taxable accounts are total stock VTSAX and total international VTIAX, would these be eligible to transfer "in-kind" without having to be sold and re-purchased? And if so, has anyone successfully done this, or thought about it?
« Last Edit: September 10, 2018, 03:44:14 PM by The frugal geographer »

terran

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #1 on: September 10, 2018, 05:31:53 PM »
I just looked at my fidelity account and get a message that says "The mutual fund you requested to trade is an Advisor Fund and is not available for retail trading. For more information, contact a Fidelity Representative" when I try to buy VTSAX, so I would say no, you won't be able to do that. I think you can convert the vanguard funds to the ETF equivalent while still at Vanguard without triggering a taxable event (a unique feature of Vanguard funds thanks to a patent they hold). Once you did that you could transfer in kind of Fidelity, but I think you'd pay a commission when you go to sell (maybe not though -- they may only charge the commission to buy).

You might consider whether the minimal difference in expense ratio (0.04% vs 0%) is worth the hassle and lack of track record on the Fidelity funds. Take a look at the discussion from when they were introduced: https://forum.mrmoneymustache.com/investor-alley/zero-fee-index-funds-at-fidelity/

I have everything at Fidelity because that's where I opened my Solo 401(k) and where my wife has her employer plan, but if not for that it would be a tossup between Vanguard and Fidelity and I'm not sure I'd switch except to simplify.

Nate79

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #2 on: September 10, 2018, 11:04:12 PM »
Have Vanguard convert the mutual funds to the ETF version which is a nontaxable conversion. Then transfer to Fidelity.

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appleshampooid

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #3 on: September 11, 2018, 07:11:17 AM »
Have Vanguard convert the mutual funds to the ETF version which is a nontaxable conversion. Then transfer to Fidelity.

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Even if you do this, you won't be able to move the money into the zero-fee Fidelity funds without a taxable event. There's no way around that - you can move stocks and ETFs around in-kind between brokerages without tax consequences, but if you want a different security, you have to buy and sell which is a taxable event. Note that Vanguard's feature of converting mutual fund shares to ETF shares is a special exception to this rule, but doesn't help you get in to the Fidelity funds themselves.


MustacheAndaHalf

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #4 on: September 11, 2018, 07:36:24 AM »
Since you plan to sell, you can't really avoid paying tax.  You might want to find out the tax impact of selling by visiting Vanguard's "cost basis" section, which should list your "VTSAX" holding under "unrealized gains".

catccc

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #5 on: September 11, 2018, 10:25:47 AM »
Since you plan to sell, you can't really avoid paying tax.  You might want to find out the tax impact of selling by visiting Vanguard's "cost basis" section, which should list your "VTSAX" holding under "unrealized gains".

It's a taxable event, but for those in lower tax brackets, it may be 0% tax on capital gains and qualified dividends.  Just a note in case OP or others reading are in this nice position.  I mean, kinda nice.  It would also be nice to earn enough to be outside of 15% (or 12%, starting this year) bracket.

DH and I earn about $140K, but ~$18.5K x 3 plus $11K goes away in pre-tax accounts (401K, 403b, 457, and two IRAs), putting us nicely in a bracket low enough for 0% capital gains tax.

Frankies Girl

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Re: Transferring taxable investments from Vanguard to Fidelity?
« Reply #6 on: September 11, 2018, 10:32:26 AM »
I honestly would not shift from Vanguard to Fido. And I am a really big fan of Fido and have all my portfolio in with them.

There is nothing wrong with just starting a new set of accounts with Fido and keeping the Vanguard accounts "as is." You don't have to have everything all in one spot. Not that there is anything wrong with doing so, as Fido and Vanguard are both stable, reliable companies I'd have no issues with, but cashing out a taxable account (and incurring expenses to do so) just to move it over from one to the other is just... not necessary. They're both perfectly fine.

If you use a budget program like Mint or Personal Capital, you can still see all of your accounts in one place for purposes of monitoring.