Rolling spouse's 401(k) into Vanguard IRA

[statsman]

A few years ago, I rolled my 401(k) into an IRA with Vanguard. Other than the logistics (mostly with my prior company), the transfer was easy. I was grateful to get out from under the mutual funds offered by my prior company. Not sure how they were managed, but you couldn't find them listed anywhere outside of the investment company (State Street).

We're about to roll over my DW's 401(k) funds to an IRA, and once again, we're considering Vanguard (although I wonder if going with Fidelity or Schwab would be considered "safer" - eggs in one basket and all). In her case, the situation is a little different. She has part of her investment in a Vanguard fund, and the rest in the Dodge & Cox Income Fund (DODIX).

The main reason for the rollover is her 401(k) company now charges an individual both quarterly and yearly fees for managing the account as an "ex-employee" (used to be covered by the company). The funds already have fees associated with them. No need to keep paying more than that.

We would like to retain those funds, but is a direct rollover allowed? Do we have to wait a period of time before we can re-purchase the same funds? Sorry, first time we would be doing this. I recall reading something related to this, but I can't remember the specifics.

On a side note, what are the fees associated with transacting DODIX under Vanguard? This is a transaction-fee mutual fund, but it appears the trade costs are related to the account level (Standard, Voyager, Voyager Select, Flagship, Flagship Select). Would the sum of my IRA, DW's potential IRA, my inherited IRA, and a joint money market fund determine the account level? Or is this determined separately for our IRAs?

 

[bloom2708]

I prefer having them in the same location. We use Vanguard.

You will have to liquidate and buy new funds. That is likely the best option to get the broad market, lowest cost index funds.

I don't know the fees for D&C. I would stick with Vanguard funds or wherever you land.

 

[stephenson]

Couple of folks on my last thread noted they like the diversity aspects of two major companies - each had their own reasons.

http://www.early-retirement.org/forums/f28/decision-sell-vanguard-ira-buy-fidelity-ira-101388.html

 

[MI-Roger]

I have never used Vanguard, but if you are happy with them, go there.

Why are you buying Loaded Funds? I can understand if that was all your wife's employer offered, but Vanguard offers many high performing No-Load funds to save you the fees.

 

[ziggy29]

Why are you buying Loaded Funds? I can understand if that was all your wife's employer offered, but Vanguard offers many high performing No-Load funds to save you the fees.

Where are you seeing there are loaded funds? I am not aware of many, if any, 401K plans with load funds (I'm not sure it is even allowed under ERISA). Expenses (which all funds have) and account fees (which some accounts have) are not the same thing as loads.

 

[SecondCor521]

Where are you seeing there are loaded funds? I am not aware of many, if any, 401K plans with load funds (I'm not sure it is even allowed under ERISA). Expenses (which all funds have) and account fees (which some accounts have) are not the same thing as loads.

A long time ago, but after ERISA was passed, there were several load funds in my 401(k) at a Fortune 500 technology firm. However, the loads (IIRC they were front-end loads) were not charged if an employee at that company chose to invest in those funds.

This was a competent enough company with enough employees that I'm fairly certain they would not have violated ERISA that badly.

I didn't invest in them, but I do remember them being there.

 

[Katsmeow]

I personally decided to roll over my 401K to Fidelity even though we had various IRAs at Vanguard. I like the not putting eggs in one basket. That said, after being with Fidelity for a few months I overall like it more so I have consider consolidating to Fidelity.

But - yes, you will have to sell those funds and then buy whatever you want at Vanguard. I don't think I would do Vanguard though if I wasn't going to invest in Vanguard funds.

 

[MRG]

OP based on your statement about Dodge and Cox having a transaction fee(I'm assuming it's part of their network) think you can just transfer in kind and retain that fund. Fees wouldn't be any different than what you are paying for the fund. You shouldn't have to be concerned about repurchasing the same fund(generally not a concern for tax advantaged accounts).

 

[donheff]

DW has a rollover IRA at Vanguard and is getting ready to rollover two retirement accounts from her employer plan. She plans to add the smaller account to her VG IRA and transfer the larger to Schwab. We like to have accounts in more than one location in case there is a business disruption at an inopportune time.

A second factor is check writing. With the change in standard deduction we no longer itemize so we do all of our charitable giving as qualified charitable distributions by check. Vanguard IRAs have a $250 minimum on checks. I don't think Schwab does. There are a fair number of charities we make $100 contributions to.

 

[24601NoMore]

OP based on your statement about Dodge and Cox having a transaction fee(I'm assuming it's part of their network) think you can just transfer in kind and retain that fund. Fees wouldn't be any different than what you are paying for the fund. You shouldn't have to be concerned about repurchasing the same fund(generally not a concern for tax advantaged accounts).

Yes - that's right..and to OP's original question about determining VG "level", they combine all of your household assets together - regardless of if you have multiple IRAs, brokerage accounts, etc.

So, while you can most likely transfer DODIX (great fund, and I own it also) up to $20 per online transaction (<$500K or less total assets) or as little as $8 (up to $1M in assets). If you're "Flagship" ($1-5M), you get 25 trades for "free"..

Note that Automatic Investments (AIPs) are $3 for transaction-fee funds (like DODIX) from other mutual fund companies through VG brokerage.

To me, DODIX is a better option in many cases than VBTLX, so while I don't hold DODIX with VG Brokerage, I'd be happy paying the TX fees as they're pretty reasonable all in all compared to say, Fidelity or Schwab who both still charge pretty outrageous purchase fees for third-party funds. (That's still a big part of the reason I don't do much business with either company..their tx-fee fund purchase costs are outrageous..)

 

[statsman]

Yes - that's right..and to OP's original question about determining VG "level", they combine all of your household assets together - regardless of if you have multiple IRAs, brokerage accounts, etc.

So, while you can most likely transfer DODIX (great fund, and I own it also) up to $20 per online transaction (<$500K or less total assets) or as little as $8 (up to $1M in assets). If you're "Flagship" ($1-5M), you get 25 trades for "free"..

I was reading about this yesterday. The only thing we would have to be aware of is any non-VG mutual fund does not count total the total assets determination with VG. Based on our current portfolio, without DODIX we are just below $1M; with DODIX we are well over $1M.

Still, even $8 per transaction (which wouldn't be often) is a lot cheaper than the almost $1,100 they charged my DW for the management fees of her 401(k) in 2019. We are gaining nothing now with the additional 0.15% expenses they charge.

 

[24601NoMore]

The only thing we would have to be aware of is any non-VG mutual fund does not count total the total assets determination with VG.

Ah, that's right. Thanks for reminding me. Obviously not enough coffee yet ..