moving inherited IRA fromVG to Schwab --suggestions?

[BarbWire]

It's finally time to move an inherited IRA from VG to Schwab. I haven't tweaked the holdings since I inherited it in 2016 so it's time to do that too. I am also fortunate to be taking RMDs over my lifetime rather than compressed into 10 years.

CURRENT VG holdings:

VAIPX... 11% ... Inflation Protected Securities
VBTLX... 22% ... Total Bond Index
VWENX... 57% ... Wellington
VWIAX... 5% ... Wellesley
VMMRX... 5% ... Money Market Prime


Which works out to 38% stocks and 62% bonds+cash. I don't know if that was what my father intended but ...

For simplicity I want to convert to cash, move to CS, and buy Schwab products or ETFs. I am not wedded to this combination of products -- my father picked them. I know he was a fan of Wellington and Wellesley.

So for a Schwab i-IRA which will be paid out over the next 20-25 years (?), what would you suggest, keeping K.I.S.S. mind? (I have another 6 years before I have to take RMDs from my my t-IRAs).


TIA

 

[target2019]

I might convert to a combination of W & W at Vanguard first. These funds transfer in-kind, and there's no fee for redemption if you need to sell for RMDs. There is a fee to buy, and I suspect you won't.

Wife has inherited IRA and we go with SWPPX S&P500, and SWVXX money fund.

For IRA's our target is 60% equity.

 

[OldShooter]

...For simplicity I want to convert to cash, move to CS, and buy Schwab products or ETFs. ...

I wouldn't call that simplicity. For simplicity I would simply fill out the Schwab transfer form and let Schwab transfer everything in kind. Then I would buy and sell to the extent I needed to in order to get the AA I wanted.

Just because you will be at Schwab doesn't mean there's any particular reason to move to Schwab products. Look at AA, expense ratios, etc., not the management company names. We have been at Schwab for years and do have a couple of Schwab funds, but mostly we're in VG. At Schwab there are fees to buy some VG funds but assuming you're a long term investor they are arguably negligible. Or you can avoid buying them.

Be sure to ask Schwab if they will give you a bonus for moving money to them. That seems to be common these days.

 

[BarbWire]

Hmmm. This makes sense. I think I will streamline to Wellington and Welsley, move that, and make sure that dividends are not reinvested (thus avoiding a fee) but put into the money market fund.

The underlying reason to get rid of VG funds is that, after 30+ years, I am finally so disgusted with them that I am moving all of my accounts to Schwab and Fidelity. But that is the subject of (many) other threads.


Thanks for the tip about asking for a bonus for moving money to them. I also have a sizeable brokerage account (with VG ETFs) to move.

 

[OldShooter]

... make sure that dividends are not reinvested (thus avoiding a fee) ...

VG does that? Really? Schwab doesn't.

I have read that Fast Eddie charges loads on dividend reinvestments, but no one who is paying attention should be with them anyway.

 

[BarbWire]

VG does that? Really? Schwab doesn't.

I have no idea whether VG does that since I've never held non-VG assets there. The guy on Schwab chat urging me to unload all my VG products and buy Schwab did say that reinvested dividends would be charged a fee....

Of course, he may be on his second day on the job ....

 

[teej1985]

I have no idea whether VG does that since I've never held non-VG assets there. The guy on Schwab chat urging me to unload all my VG products and buy Schwab did say that reinvested dividends would be charged a fee....

Of course, he may be on his second day on the job ....

I've never heard of a reinvestment fee at the typical brokerages that we all use. Chat guy wants you to switch to Schwab funds so that they make more $$$ off you.

 

[target2019]

OP,

Vanguard mutual funds at Schwab:
- Dividends reinvest for free (unless policy recently changed).
- Ordinary purchase of shares gets a fee (you may be able to finagle some free trades though).

The point I was trying to make was, "If you want W & W, then transfer what you have, or even buy more, before moving the money.

Also important - the sweep account is very low interest rate. So periodically you would buy a money fund to get higher interest.

You might also let dividends reinvest (provided there is no fee). Since you're years away from RMD onset, that might work fine.

 

[OldShooter]

... Vanguard mutual funds at Schwab: ... Ordinary purchase of shares gets a fee (you may be able to finagle some free trades though).

Only some VG funds get a sales charge. We trade so little and fairly large tickets, so I have never bothered to figure our the details.

... Also important - the sweep account is very low interest rate. So periodically you would buy a money fund to get higher interest. ...

Yes. Sweep account is FDIC bank savings account. SWVXX is where your cash should go. When you sell, it settles in one day, so if you are trading it doesn't gum things up.

 

[Earl E Retyre]

...

Yes. Sweep account is FDIC bank savings account. SWVXX is where your cash should go. When you sell, it settles in one day, so if you are trading it doesn't gum things up.

Hmmm ... I was thinking of opening up a Schwab account and moving one of my IRAs to it since so many people here like them and since I would have a local brick & mortar if I ever wanted one. But now, I am rethinking this decision if I understand what you are saying. I was going to use the account primarily to buy brokered CDs. Are you saying that if I have a bunch of brokered CDs giving off interest, that the interest would go to an FDIC sweep account at a low rate ... Then I have to move that interest into SWVXX in order to get a higher rate ... Then once I have enough accumulated where I want to buy another CD that I have to move it back to the sweep again? Or am I misunderstanding what you are saying?

 

[OldShooter]

Hmmm ... I was thinking of opening up a Schwab account and moving one of my IRAs to it since so many people here like them and since I would have a local brick & mortar if I ever wanted one. But now, I am rethinking this decision if I understand what you are saying. I was going to use the account primarily to buy brokered CDs. Are you saying that if I have a bunch of brokered CDs giving off interest, that the interest would go to an FDIC sweep account at a low rate ... Then I have to move that interest into SWVXX in order to get a higher rate ... Then once I have enough accumulated where I want to buy another CD that I have to move it back to the sweep again? Or am I misunderstanding what you are saying?

Nope. You understand it correctly unless it has recently changed. This change happened about the time that trading fees went away. When that happened, brokers needed replacement income and Schwab chose to try to capture this float. I expected others to follow but they have not done so, at least yet.

 

[Bruno]

I transfered my VG and EJ to Schwab and my friend sent me a referral code to get up to $1000 to move $500k to schwab account for 1 year. I moved OVER 500k but I only got $500 since the open Schwab account they counted it as 2 accounts a IRA and inherited IRA. It was a FIGHT but I finally got the $1000. I moved my W&W but I had shut off Reinvest but not sure Schwab can buy shares of certain funds.
If someone wants a referral code for the $1k offer send me a PM and i can send one too you. The person does NOT get anything for sending a refferal Sch told me buy them a cup of coffee.

https://client.schwab.com/secured/refer-a-friend