question: Roth conversion brokered CDs Vanguard/Fidelity

[Earl E Retyre]

From what I believe I read via a google search, Fidelity will allow you to transfer a brokered CD in a traditional IRA to a Roth IRA but Vanguard will not. Does anyone know if this is true?

 

[Sunset]

Now you have me wondering about a brokered Treasury Bill doing the same thing

 

[pb4uski]

I don't know but it doesn't sound right.

 

[xlf11]

On VG website it says "you can only convert the entire CD", so it seems you can convert the whole CD, not partial. Also, you cannot convert the unsettled ETF either.

 

[Earl E Retyre]

In my Vanguard account, when I select convert to Roth, it does not allow me to select any of the individual brokered CDs. So, I think it only allows equities or cash.

In my Fidelity account, I cannot test it currently because I do not have a Roth account at Fidelity and it wants me to select a Roth account as the first step. I can create one and see but figured I would ask here first.

When I googled, I found the following discussion on Bogleheads ... https://www.bogleheads.org/forum/viewtopic.php?t=299484

It says, "I transferred some brokered CD's in-kind from Vanguard to Fidelity with no problems. Vanguard wouldn't let me do a partial Roth conversion with the brokered CD but Fidelity did." But I was not sure what that meant and it was back in 2020.

I was hoping someone here would have tried it.

 

[pb4uski]

On VG website it says "you can only convert the entire CD", so it seems you can convert the whole CD, not partial. Also, you cannot convert the unsettled ETF either.

What doesn't make sense to me is that brokered CDs are typically $1,000 denominations... if I have $100,000 I own 100 $1,000 CDs.

 

[MarieIG]

I have been toying with this idea as an experiment.

On Vanguard when I click into conversions, I get a message that I can't convert the CD (or other fixed instrument) unless I convert your entire account. (I cannot check a box for conversion next to the fixed instruments.)

i have a small Fidelity account (traditional and Roth - which I rolled over from Vanguard) with which I have been playing. I transferred some cash as part of a 60 day roll over from Vanguard to Fidelity and one share of a Vanguard ETF into the traditional.

The way the Fidelity account appears when I pull up a transfer request - it looks as if it would transfer (or convert) partial shares of an instrument from the traditional to the Roth. So I tried that with my one ETF share - and it sold the whole thing and transferred the proceeds. (Which was not what I wanted.) I bought it again - and transferred the share. BTW - the taxable amount was the value of the ETF share at closing, which was ok as that fund was dropping like a stone on the date of the conversion.

I called CS who indicated that my account wasn't set up for partial transfers and they "fixed" it, but I haven't tried to transfer a partial share. I have a CD in my traditional IRA at Fidelity which is paying monthly interest, and I transfer/ "convert" the interest each month when it is paid.

There doesn't seem to be anything in Fidelity precluding the transfer/ conversion of fixed instruments. Maybe I will try buying a tiny fractional share of a CD and try to convert a portion or share of that at a time. (I am afraid to try to convert a portion or share of the CD that I have as I don't want to end up having it sold by mistake.)

Update - I went over to Fidelity - and it will let me convert one share of my CD.

 

[Accidental Retiree]

We’ve done in-kind Roth conversions of ETFs (not the entire position) and small CDs ($5000) at Schwab.
The rest of the IRA stayed put.

I was really pleased when Schwab added this feature to the IRA.

 

[Earl E Retyre]

On Vanguard when I click into conversions, I get a message that I can't convert the CD (or other fixed instrument) unless I convert your entire account. (I cannot check a box for conversion next to the fixed instruments.)

That is what I am seeing ... which is why I do not believe Vanguard will do what I want (i.e., transfer 1 CD without the entire account).

I went over to Fidelity - and it will let me convert one share of my CD.

OK, perfect. So, it looks like Fidelity will do what I want (and them some). I simply wanted to transfer an entire CD to Roth without the entire account. And, I think you are saying not only does Fidelity allow this but they will even allow a partial transfer of CD.

I have a large CD maturing in Navy in January and I was trying to decide where to transfer it. I will transfer it to Fidelity so that I can do Roth conversions.

Thanks for answering my question!!