Losing faith in Vanguard

[Moemg]

Luckily I was watching my account .Could you imagine just trusting Vanguard then finding this mistake a month later ?

 

[Texas Proud]

Totally agree that it should be automated, but no need for a paper form... I have done 3 recharacterizations over the last few years and all have been by phone.

Did my by phone also, but I think they did make me mail in a form...

But, that is not allowed now so who cares...

 

[braumeister]

When I have recharacterized with Fidelity, it has always been online. Very simple.

 

[HFWR]

You can't get good help anymore.

That’s because we’re all FIRED! [emoji41]

 

[Free bird]

Screwing up someone personal finances that they've painstakingly planned out should not be dismissed as sh*t happens. Would you want that lazy mindset at your local nuclear power plant?

 

[Rosie]

DH & I have had accounts at Vanguard for decades. We've had no problems with Vanguard, ever.

When my Mom passed away about 18 months ago, I was expecting difficulty in working with Vanguard on the things that needed to be done. Vanguard surprised me by putting me in touch with their specialists in that area, and everything was done correctly, on time, and with no cumbersome hoops. Oh, and I think we were given a direct number to that area so we could just call them whenever we needed something.

I was in a very similar situation, except it was my FIL and it was about 5 years ago. We had several accounts from various sources outside of Vanguard to put in DH's name and then transfer to his Vanguard account. Our Flagship rep was very helpful, as was the specialist who was assigned to us -- and yes, we were given the specialist's direct number. Between the two of them, they made a very cumbersome process much less so. I was tempted to send them flowers and candy when it was all completed!

We're Flagship clients so the level of service we received was probably much better than if we weren't.

After that positive experience, I eventually moved all of our investment accts to Vanguard. We haven't started taking RMDs yet, but I have no reason to believe we'll have any difficulties. Knock wood.

 

[Lsbcal]

Last week I got a message from Vanguard to call them regarding my RMD's .I had them set up to automatically happen on Jan.5 .I called and everything was fine until on Saturday I saw they took almost $20,000 more than the required amount . I called today and they admitted their mistake but it will take a week to fix . What is happening with Vanguard and what other companies do people use ?

This may not interest you but as I understand RMD's, it is often better to take the RMD in the later part of the year. First your investments accumulate tax free until then (stocks on balance go up).

Second there are no estimated taxes needed if you pay them with the final RMD withdrawal.

So my plan is:
January through November: take IRA distributions as needed up to RMD minus Fed tax due
December: take final RMD distribution equal to Fed tax due

This is my first RMD distribution year so hopefully I got this idea right. Corrections?

 

[kgtest]

This may not interest you but as I understand RMD's, it is often better to take the RMD in the later part of the year. First your investments accumulate tax free until then (stocks on balance go up).

Second there are no estimated taxes needed if you pay them with the final RMD withdrawal.

So my plan is:
January through November: take IRA distributions as needed up to RMD minus Fed tax due
December: take final RMD distribution equal to Fed tax due

This is my first RMD distribution year so hopefully I got this idea right. Corrections?

I like this idea,do any other members employ this strategy?

The amount subject to RMD is based on prior year's ending balance

 

[GrayHare]

Depends on your tax bracket. Many here should take a traditional RMD early, a Roth later. If you taka a traditional RMD later you are paying ordinary income rate tax on the growth that year. By taking it early, you can put that money into a regular investment account until needed, and pay tax at the lower cap gain and dividend rates.

 

[PatrickA5]

Over the years, I've had trouble with customer service from both FIDO and VG.

I recall having to "train" a few FIDO reps on the back door roth contribution/conversion back when the income limits stopped being a factor in doing Roth conversions. I had at least 3 reps tell me all contributions to a traditional IRA were pre-tax (tax deductible) and having a basis in a Trad IRA wasn't possible. I never could get them to agree that I was right.

I've had similar problems with VG recently when trying to set up one of their Advantage Checking accounts. Basically, nobody knew anything about them and couldn't answer the simplest of questions.

Fidelity's website is better, but I've gotten so used to VG's now that I have no problems doing what I need to do without calling.

 

[kgtest]

Depends on your tax bracket. Many here should take a traditional RMD early, a Roth later. If you taka a traditional RMD later you are paying ordinary income rate tax on the growth that year. By taking it early, you can put that money into a regular investment account until needed, and pay tax at the lower cap gain and dividend rates.

Thanks GrayHare. This is actually precisely why I formulated the question.

as for VG vs Fidelity, I've used both extensively and both have their issues, customer service has been fairly helpful for the simpler how do I questions.

 

[Lsbcal]

Depends on your tax bracket. Many here should take a traditional RMD early, a Roth later. If you taka a traditional RMD later you are paying ordinary income rate tax on the growth that year. By taking it early, you can put that money into a regular investment account until needed, and pay tax at the lower cap gain and dividend rates.

With the 2018 lower marginal rates I'm not sure this is an issue for many here. For instance, if you are retired and in the 12% rate range then is this a problem? We personally might eventually be pushed into the higher marginal rate range as RMD's increase over the years. I'm not up on the new cap gain and dividend rates.

But yes, probably depends on one's tax situation. And let's not forget tax policy is not a constant. May change a lot over the next decade ... or not.

 

[Dash man]

I use USAA and have for years. Never had a problem with my investments, all stocks and ETFs in taxable accounts, TIRAs and Roth IRAs. RMDs won’t be an issue for 9 years, but we’re planning to reduce them as much as possible by converting DW 401k (with Fidelity) into her Roth IRA with USAA, and my tIRA into my Roth.

 

[Texas Proud]

Screwing up someone personal finances that they've painstakingly planned out should not be dismissed as sh*t happens. Would you want that lazy mindset at your local nuclear power plant?

There is not company out there that has not had multiple errors made by their employees... including nuclear power plants....

The question is how quickly they fix the problem... some do a better job than others...

 

[GrayHare]

With the 2018 lower marginal rates I'm not sure this is an issue for many here. For instance, if you are retired and in the 12% rate range then is this a problem?

Someone in the 12% bracket is likely to owe 0% on capital gains, in which case they will pay less tax, perhaps no tax, by having cap gains instead of ordinary income.

 

[PoorOldCountryBoy]

I like this idea,do any other members employ this strategy?

The amount subject to RMD is based on prior year's ending balance

OP, I use Schwab

kgtest, I take my withdrawals (72t for this early 50 something, not RMD) in late December for the year - gives me the whole year to accumulate. One downside of this is the danger of missing the withdrawal for the calendar year.

To avoid any trouble, I schedule these with Retirement Services. I could do them individually, but this way I have help if there is a health issue with me at the wrong time of the year. My withdrawal shows up as scheduled about a week before it is supposed to be done, so I do have a chance to verify it before it happens.

I also do an inherited IRA manually early in the year-it is very little and it's just less paperwork, and little concern if I mess up due to the small amounts involved. I just mention this because I can do either approach at Schwab with no problems.

 

[Lsbcal]

Someone in the 12% bracket is likely to owe 0% on capital gains, in which case they will pay less tax, perhaps no tax, by having cap gains instead of ordinary income.

If I draw out RMD's at the beginning of 2018 and put it in an investment that generates cap gains, won't they be short term gains if needed for spending? I think short term gains are taxed at ordinary income levels. In our case we will want those RMD's for spending. So I guess this depends on one's income spending streams.

 

[GrayHare]

If I draw out RMD's at the beginning of 2018 and put it in an investment that generates cap gains, won't they be short term gains if needed for spending? I think short term gains are taxed at ordinary income levels. In our case we will want those RMD's for spending. So I guess this depends on one's income spending streams.

In that case to raise cash I'd simply sell a long term holding, such as one from the early RMD of the prior year.

 

[Lsbcal]

In that case to raise cash I'd simply sell a long term holding, such as one from the early RMD of the prior year.

Yes, but that has been spent in the RMD year withdrawn. That is the point. Some people will choose not to spend the RMD but others will. In our case we will spend it along with SS and Roth withdrawals.

Some could withdraw excess IRA distributions beyond the RMD to get at the cap gain treatment. In our case, that is not optimal.

 

[Moemg]

We're Flagship clients so the level of service we received was probably much better than if we weren't.

After that positive experience, I eventually moved all of our investment accts to Vanguard. We haven't started taking RMDs yet, but I have no reason to believe we'll have any difficulties. Knock wood.

I am also Flagship and have been so for many years but they still screwed up .

 

[Moemg]

After this years run up I wanted my RMD 's to help rebalance my portfolio .

 

[Moemg]

The squeaky wheel gets progress . Vanguard called me today and they expedited it through their system and everything will be fixed by tomorrow and I will get the gains for the days out of the market . They admitted it was a computer error . I am still leery and may move some to Fidelity .Besides complaining to them I did write on their facebook page and that is when they did something to move it along.

 

[Sittingduck]

Addressing the OP's question:

I have half my assets in T Rowe Price. Have been a long time customer and have found them very easy to work with and conscientious with follow-up.

This summer I moved all of my 401k out of my employers accounts to Vanguard and TRP.
Basically I found Vanguard to be a do-it-yourself shop and TRP to be a concierge service.
I am happy with both companies funds but I found transferring money to TRP a lot less nerve racking and easier. They assigned someone to me who would call and let me know the progress, opened funds for me on the phone, and they followed up with calls to let me know when the checks arrived and then cleared. 2 phone calls. At Vanguard you hack away at their website or try to hold the interest of an overworked phone rep long enough to get an approximation of your question answered. They probably have to handle so many calls an hour.

You get what you pay for: Low cost indexed funds - hack away. Higher cost managed finds - soothed nerves and confidence things were done right. After that - the funds returns speak for themselves.

 

[redduck]

Moemg...
Nice move. And, thanks for that information regarding Facebook.

 

[Amethyst]

My only gripe to date is that the Flagship "benefits' haven't been of any use. Nor is their dashboard, but that is true of other sites too.