Vanguard small-business retirement plan is moving to Ascensus

[Surewhitey]

Never thought Vanguard would do something like this. The last thing I want is another account & a company I've never heard of (Ascensus). Hoping to at minimum transfer my SEP401k to a rollover IRA with Vanguard vs this. Option 2 would be opening the same 401k with Fidelity and rollover there.

Just aggravating to take time to clean up their mess making.

https://sb.web.vanguard.com/

 

[HarveyS]

ugh. From the link:
What fees can I expect to pay at Ascensus?
Here's how fees will be assessed at Ascensus after the transition:
Ascensus will assess a $20 annual fee per participant, for trust and custody services.
In line with Vanguard's fees, Ascensus's account service fees will be $25 per mutual fund for SIMPLE IRAs and $20 per fund for Individual 401(k) and multi-participant SEP-IRAs.
Participants who terminate an account with Ascensus after January 1, 2025, will be assessed a onetime $25 account termination fee (no fees will be assessed for partial distributions).
Any exceptions or waivers of account service fees provided by Vanguard will no longer apply.

For more details, you can review the fee information included in the agreement for your account type.

 

[Surewhitey]

ugh. From the link:
What fees can I expect to pay at Ascensus?
Here's how fees will be assessed at Ascensus after the transition:
Ascensus will assess a $20 annual fee per participant, for trust and custody services.
In line with Vanguard's fees, Ascensus's account service fees will be $25 per mutual fund for SIMPLE IRAs and $20 per fund for Individual 401(k) and multi-participant SEP-IRAs.
Participants who terminate an account with Ascensus after January 1, 2025, will be assessed a onetime $25 account termination fee (no fees will be assessed for partial distributions).
Any exceptions or waivers of account service fees provided by Vanguard will no longer apply.


For more details, you can review the fee information included in the agreement for your account type.

This is something they've done for me. They waived these fees for having a combined larger amount of all our accounts. I just don't want to deal with the new account stuff...

 

[teej1985]

This is something they've done for me. They waived these fees for having a combined larger amount of all our accounts. I just don't want to deal with the new account stuff...

Well you either pay fees to Ascensus or you send it somewhere else that doesn't have fees, like Schwab or perhaps ETrade

 

[k-man]

Never thought Vanguard would do something like this. The last thing I want is another account & a company I've never heard of (Ascensus). Hoping to at minimum transfer my SEP401k to a rollover IRA with Vanguard vs this. Option 2 would be opening the same 401k with Fidelity and rollover there.

Just aggravating to take time to clean up their mess making.

https://sb.web.vanguard.com/

I just received the letter from them about this. Not happy at all that they're moving my individual 401K to this company.....that I've never heard of. Our entire portfolio is with VG, but we're now likely to move everything over to Fidelity. Our HSA is already over there, so this is the last straw. I'm betting a lot of VG customers will follow suit and either move to Schawab or Fidelity.

 

[Yoheadden]

I haven’t heard about this before today. Not happy at all. DW and I each have SEP and Simple accounts here. Might be time to move to Fidelity to join our HSAs.

 

[ItsTime]

I just received the letter as well and also have all of my holdings at Vanguard. I am planning to open an HSA soon so that will likely influence where I move my solo 401(k) and SEP IRA accounts. Although I am lifetime Vanguard customer, I will now consider adding Fidelity or Schwab as another service provider.

 

[USGrant1962]

My solo 401(k) is with Vanguard. My thoughts are:

• This is a tiny portion of Vanguard's assets with greater than average paperwork involved. They really don't care if you leave so huffing and puffing is meaningless.
• Fido does not have Roth in their solo 401(k) so they are not an option. Schwab apparently does, so that might do if you want to move.
• There is a long thread on Bogleheads with the usual good facts mixed with random disinformation. There are some good comparisons between VG, Fido and Schwab.
• Moving a solo 401(k) is not a trivial exercise and you can easily get tripped up - be careful. For example, if you actually (or accidentally) close your solo 401(k) you cannot open another for 2 years.

I'm going to wait and see the real effects. $20 here or there is not really important once you have 5 digits or more in your account. It does suck that high value customers at VG will now have to pay those fees, but they are not really material at a certain level.

 

[Sunset]

OP - thanks for bringing this up. I have not yet heard officially about it from anyone else. Guess it's in the mail.

I'm going to wait a bit before doing anything, as there is no rush.

 

[RE2Boys]

For a moment I was concerned about this Vanguard change. However, upon further reading, it appears that this change will not apply to a single participant SEP-IRA, which is what I have.

 

[Surewhitey]

Here's my updated experience.

Called them & asked if rolling it to my Rollover IRA was an option to the new account. They said yes & completed the process in 5 minutes (even the Docusign part). It was showing up in the IRA in a few days.

 

[Surewhitey]

My solo 401(k) is with Vanguard. My thoughts are:

• Moving a solo 401(k) is not a trivial exercise and you can easily get tripped up - be careful. For example, if you actually (or accidentally) close your solo 401(k) you cannot open another for 2 years.

I'm going to wait and see the real effects. $20 here or there is not really important once you have 5 digits or more in your account. It does suck that high value customers at VG will now have to pay those fees, but they are not really material at a certain level.

Curious if this is the case with the same company or would apply to a new SEP 401K with another provider (Fidelity)?
Thanks

 

[Qs Laptop]

My solo 401(k) is with Vanguard. My thoughts are:

• This is a tiny portion of Vanguard's assets with greater than average paperwork involved. They really don't care if you leave so huffing and puffing is meaningless.
• Fido does not have Roth in their solo 401(k) so they are not an option. Schwab apparently does, so that might do if you want to move.

Fido does indeed have a solo 401(k) option but you have to contact them to get it set up. I just went through this process about a year ago.

 

[Yoheadden]

So I am the Plan Sponsor, as well as, a participant in other Simple IRA at our small business. I contacted Fidelity to get information about possibly moving our plan to them. The individual I spoke with said they could switch our plan at the beginning of the year, but not during the year. The reason being is our Vanguard plan is a designated plan and Fidelity’s version is a non designated or prototype plan.
I had never heard of this before. With the limited information I could find, it seems this is basically in reference to the plans agreement or terms.
Is this correct? Is anyone more familiar with his situation?

 

[FindingForward]

Fido does indeed have a solo 401(k) option but you have to contact them to get it set up. I just went through this process about a year ago.

USgrant1962 was referring to a roth solo 401k. Fidelity currently does not offer a ROTH option - they really should fast track that, considering how many potential new clients they could secure from Vanguard.

 

[FindingForward]

So I am the Plan Sponsor, as well as, a participant in other Simple IRA at our small business. I contacted Fidelity to get information about possibly moving our plan to them. The individual I spoke with said they could switch our plan at the beginning of the year, but not during the year. The reason being is our Vanguard plan is a designated plan and Fidelity’s version is a non designated or prototype plan.
I had never heard of this before. With the limited information I could find, it seems this is basically in reference to the plans agreement or terms.
Is this correct? Is anyone more familiar with his situation?

You might want to try calling back and getting a different rep - see if the answers align. Several folks on the boglehead site report that they have already switched from V to Fidelity the past few weeks. There's an ongoing thread there. A couple of posters reported getting inaccurate info by well-meaning Fidelity call center reps.

 

[Qs Laptop]

USgrant1962 was referring to a roth solo 401k. Fidelity currently does not offer a ROTH option - they really should fast track that, considering how many potential new clients they could secure from Vanguard.

I can tell for a fact that Fidelity has a Roth 401K Solo option. I've been making contributions to mine since November 2022. You have to call them and ask to set up a "non-prototype retirement account" and explain you want a solo Roth 401K account. They make you open up both a solo traditional 401K and a solo Roth 401K account, whereupon you can make contributions to whichever account you desire.

 

[FindingForward]

I can tell for a fact that Fidelity has a Roth 401K Solo option. I've been making contributions to mine since November 2022. You have to call them and ask to set up a "non-prototype retirement account" and explain you want a solo Roth 401K account. They make you open up both a solo traditional 401K and a solo Roth 401K account, whereupon you can make contributions to whichever account you desire.

wow...that's news to me. Thanks for sharing. There are literally a few hundred posts on bogleheads with many lamenting Fidelity's lack of a ROTH solo option. They've called and emailed reps. Each replied back with the same info: "We don't offer a roth solo401k option right now but we'll pass on your request/feedback."

 

[Qs Laptop]

wow...that's news to me. Thanks for sharing. There are literally a few hundred posts on bogleheads with many lamenting Fidelity's lack of a ROTH solo option. They've called and emailed reps. Each replied back with the same info: "We don't offer a roth solo401k option right now but we'll pass on your request/feedback."

I opened mine in October 2022 after TD Ameritrade announced they were going to discontinue solo Roth 401K's. This is a bit after they announced their sale to Schwab. I could have transferred over to Schwab but I didn't want yet another financial account and wanted to consolidate everything at Fidelity.

Maybe Fidelity no longer has the option, I don't know. But it's worth a phone call to their retirement department.

 

[Sojourner]

Here's my updated experience.

Called them & asked if rolling it to my Rollover IRA was an option to the new account. They said yes & completed the process in 5 minutes (even the Docusign part). It was showing up in the IRA in a few days.

This is exactly what I plan to do. Reading through the long thread about all this over on the BH forums, it seems like there is a tax form that must be filed (Form 5500, to report the "closure" of the Solo 401(k) plan) if the plan meets certain reporting thresholds. Did your Vanguard rep mention anything about that? I have a call setup with my rep to discuss this whole process, so I will update this comment to report anything noteworthy that I learn.

 

[Yoheadden]

You might want to try calling back and getting a different rep - see if the answers align. Several folks on the boglehead site report have already switched from V to Fidelity the past few weeks. They have a large ongoing thread there. A couple reported getting inaccurate info by well-meaning call center reps.

I was thinking the same thing. As we all know, sometimes it’s who you talk to.

 

[Surewhitey]

This is exactly what I plan to do. Reading through the long thread about all this over on the BH forums, it seems like there is a tax form that must be filed (Form 5500, to report the "closure" of the Solo 401(k) plan) if the plan meets certain reporting thresholds. Did your Vanguard rep mention anything about that? I have a call setup with my rep to discuss this whole process, so I will update this comment to report anything noteworthy that I learn.

He only asked if it was to be closed, nothing mentioned about a form. I'll look into this. Thanks.

 

[Surewhitey]

This is exactly what I plan to do. Reading through the long thread about all this over on the BH forums, it seems like there is a tax form that must be filed (Form 5500, to report the "closure" of the Solo 401(k) plan) if the plan meets certain reporting thresholds. Did your Vanguard rep mention anything about that? I have a call setup with my rep to discuss this whole process, so I will update this comment to report anything noteworthy that I learn.

So I called the IRS line for the 5500 form. Here's the skinny that applies to 1 participant plans (me).

If the plan is under $250k, no filing of the 5500-EZ form for the annual reporting, BUT...

If you are closing a plan, you have to do a "closure" form, the same 5500-EZ and indicate this is the last & closing year.

I've filled out the form on the EFAST2 is an all-electronic system designed by the Department of Labor and seems to have been completed & in my "filing forms list". Hoping for doing it accurately.

Thanks again for the prod to dig a little deeper.

 

[Sojourner]

So I called the IRS line for the 5500 form. Here's the skinny that applies to 1 participant plans (me).

If the plan is under $250k, no filing of the 5500-EZ form for the annual reporting, BUT...

If you are closing a plan, you have to do a "closure" form, the same 5500-EZ and indicate this is the last & closing year.

I've filled out the form on the EFAST2 is an all-electronic system designed by the Department of Labor and seems to have been completed & in my "filing forms list". Hoping for doing it accurately.

Thanks again for the prod to dig a little deeper.

Thanks for posting this. What is the filing deadline for the 5500-EZ to report the closure? Is it Dec 31 of this year, or Apr 15 of next year? Or some other date? (My Vanguard rep said no reporting was necessary, so it's good to know the real answer from the IRS!)

 

[MissMolly]

If you terminate your Solo 401(K) plan, a final 5500-EZ filing is required, regardless of plan value. The filing must occur within 7 months of plan termination.