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 ?
On Oct 31, 11:31 pm, "ps56k"
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
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.
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.
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).
Dave Dodson writes:
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
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).