Have had my IRAs with Fidelity for years when I worked downtown, and the Fidelity office was right downstairs... Left that world several years ago... Was wondering - what are the effects of exchanging mutual funds within an IRA ? What about totally moving an IRA from one company to another ? ie - Fidelity to Vanguard - Is is looked at as "selling", or more of a "transfer" of dollars from one trustee to another ?
You can change mutual funds in your IRA at Fidelity with no tax consequences. This can be done at Fidelity.com or by phone.
Similarly, you can move your IRA from Fidelity to a new IRA at Vanguard without tax consequences. The easiest way is to fill out a Vanguard IRA application and a transfer form and send them to Vanguard. I suppose that you could find the forms on Vanguard.com. Vanguard will contact Fidelity to have the assets transferred. I recently transferred a Fidelity brokerage IRA to a brokerage IRA at another company, and was surprised that the transfer was "in kind," i.e., the actual shares of the Fidelity mutual funds were transferred.
Another way to accomplish the transfer is to cash out of the Fidelity IRA and, within 60 days, deposit the funds into the new IRA.
Dave
100% true but I never recommend this. The risk of something going wrong is greater than zero, and if the deposit is not made by day 60, it's deemed an early withdrawal, with tax and penalty. To get this waived isn't impossible, but not trivial. Direct transfers are the way to go and so long as the receiving broker handles the mutual fund, it can be done "in kind" meaning you move the assets, you don't need to sell, move cash, and repurchase.
In an IRA, selling has no particular effect, as long as you never take a distribution. Transfering to another custodian is not a distribution. When transfering, check first to see which will be the least expensive way to sell. Vanguard will charge for selling the funds if you transfer in-kind. Others have given you information on accomplishing that. Fidelity might or might not. You could sell all the funds and transfer just cash. However, you will then be out of the market for however long it takes to complete the transfer. Whether that would be a good or bad thing is unknown.
Fidelity will, I believe, ding you with a transfer-out fee. $50 springs to mind, but that might not be accurate.
Brian
thanks for all the basic info - will go do some reading on each website, and decide if a swap is worth it -
If you are talking about a Vanguard mutual fund account, then you may have an lengthy indeterminate period where the money is liquidated out of Fidelity mutuals before going back into Vanguard mutuals. You can miss a lot of a market move! Or maybe you'd be transferring to Vanguard brokerage (which was about the most ghastly of all brokerages I tried years ago - with Fidelity the best).
Even Vanguard brokerage probably doesn't want your Fidelity mutual funds - well, there may be exceptions but out-of-family-funds can be restricted or forbidden unless there are marketing agreements. Might want to switch them to etfs beforehand which are fully portable. Maybe Vanguard now has commission free etfs like the 25 of Fidelity?
The mechanics of an IRA transfer can be pretty simple. I did have to mail a form for this recently, but I found other account transfers could be done all electronically without a scrap of paper (faxing them stuff created from your screen such as pdf records and fingerpainted signatures). The receiving brokerage may offer huge compensations for the trouble and expense of your transfer - but not unless you research and sign up for the promotions first (sometimes these exclude IRAs).
I'm interested to know why you might want to switch from Fidelity to Vanguard.
Dave
I can't speak for ps, but an easy reason would be low fees, access to Vanguard funds with no transaction fee, and commission-free trades of Vanguard ETFs.
I haven't used Vanguard's brokerage services, and they got really bad reviews a few years back, shortly after Vanguard bought out a brokerage and rebranded it. But their fees have gone down a lot, they've got a long list of no-transaction-fee funds (in addition to Vanguard's own), and in my dealings with Vanguard for other things, their customer service has been fabulous.
I'd give them serious consideration, at least to try out. They don't charge anything to open an account or to close one or to transfer assets in or out. And in fact, they appear to be willing to pay some of the transfer fees that other places charge if you transfer your assets from the other place over to them. (I don't have a link handy, but I'd swear I saw somewhere that they'd pay you back up to $150).
That all said, there are a lot of reasons to have a brokerage account at Fidelity, not the least of which is their excellent website. (Their funds are a more mixed bag, their NTF list is quite good, their fees are reasonable, and now they've got no-commission transactions on a list of ETFs which include some excellent ones).
Some of Fidelity's funds have a "frequent trading" sales charge. Typical around a percent if sell in less than 90 days. Mutual funds are not short-term vehicles.
Well, yes, but I doubt that has anything to do with IRAs specifically.
Brian
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