Of course, here is a detailed and lengthy post on closing a Vanguard account.
Step 1: Are you sure you want to say goodbye?
Before we dive into the nitty-gritty of closing your Vanguard account, let's take a moment to be absolutely sure this is the right move for you. Have you considered all your options? Vanguard is known for its low-cost index funds, ETFs, and a wide array of investment options. You've built a relationship with them, and closing your account means transferring or selling your investments. Are you just trying to consolidate accounts, or are you genuinely unhappy with their services?
If you're consolidating, you might be able to do an in-kind transfer, which is much simpler than selling everything. If you're looking for different investment options, have you explored all of Vanguard's offerings? Think about it for a moment, and once you're 100% committed to this path, we can move on to the next step.
Step 2: Understand the types of closures
Closing a Vanguard account isn't a one-size-fits-all process. The steps you take depend on the type of account you have and what you want to do with your assets. Here's a breakdown of the most common scenarios:
Scenario A: Full Account Closure (Liquidation)
This is the most straightforward but also the most impactful. You will sell all your investments within the Vanguard account and receive the proceeds as cash. This is a taxable event, so be mindful of potential capital gains.
Scenario B: Transfer to Another Brokerage (In-Kind Transfer)
This is often the preferred option if you want to keep your investments. You move your holdings (e.g., your Vanguard ETFs or mutual funds) directly to another brokerage account without selling them. This is not a taxable event.
Scenario C: Transfer to a Vanguard Account with a Different Registration
Sometimes you just need to move assets from one Vanguard account to another, for instance, from an individual account to a joint account. This is an internal transfer and is usually very simple.
Scenario D: Partial Account Closure
This isn't a full closure, but it's worth mentioning. You can sell some of your holdings and keep the account open with a reduced balance. This is useful if you just need to access some of your money but want to maintain your relationship with Vanguard.
Important Note: Make sure you have a destination for your assets and funds before you start the process. You'll need a new brokerage account, a bank account, or another Vanguard account to receive your assets.
Step 3: Prepare the necessary information
Before you initiate the closure, gather all the required information to make the process as smooth as possible. This includes:
Your Vanguard account number(s)
Your personal information (name, address, social security number)
Information for the receiving institution (account number, routing number for a bank, or the receiving brokerage's DTC number for a transfer)
Information about your holdings in the account (e.g., fund names, ticker symbols)
Having this information readily available will prevent delays and headaches.
Step 4: Initiate the closure process
Now, let's get to the action. The method you use to initiate the closure will depend on your chosen scenario from Step 2.
For a Full Liquidation (Scenario A):
Sell all your holdings. Log into your Vanguard account online or through the mobile app. Navigate to the "Trade" or "Transact" section. Sell all your mutual funds, ETFs, and other securities. Be aware of any minimum investment requirements or transaction fees that may apply.
Withdraw the cash. Once your trades have settled (which can take a few business days), you will have a cash balance in your account. You can then withdraw this cash via an electronic bank transfer (ACH), a wire transfer, or a check.
Confirm the closure. Once the cash is out, the account will be empty. You may need to call Vanguard's customer service to officially close the account and ensure it's marked as "closed" on their system.
For an In-Kind Transfer (Scenario B):
Initiate the transfer from the receiving brokerage. This is the most crucial step. Do not close your Vanguard account first! Your new brokerage will have a "Transfer Account" or "ACAT Transfer" form. Fill out this form with your Vanguard account information.
Provide the necessary documents. You may need to provide a recent account statement from Vanguard to the new brokerage.
Let the brokerages do the work. The receiving brokerage will contact Vanguard to initiate the transfer. The process can take anywhere from 5 to 15 business days depending on the complexity of your holdings. You do not need to contact Vanguard unless the receiving brokerage tells you to.
For a Vanguard-to-Vanguard Transfer (Scenario C):
Log in to your account. Navigate to the "Account maintenance" or "Transfer" section.
Select the "Transfer assets" option. Follow the on-screen instructions to move funds or shares from one Vanguard account to another. This is usually an instantaneous or very quick process.
Step 5: Follow up and verify
Once you have initiated the closure or transfer, don't just forget about it. It's your money, and you need to ensure it moves safely.
Check the status. If you did an in-kind transfer, log in to your new brokerage account to see if the assets have arrived. If you liquidated your account, check your bank account to see if the funds have been deposited.
Confirm with Vanguard. After a few weeks, call Vanguard's customer service to confirm that your account is officially closed. They can provide you with a confirmation number or a letter.
Keep your records. Save all confirmation emails, letters, and statements related to the closure for your records, especially for tax purposes.
Step 6: Handle tax implications
This is an often-overlooked but extremely important step.
For liquidations (Scenario A): You will receive a Form 1099-B from Vanguard for the sale of your securities. This form will report your proceeds and cost basis, which you will need to report on your tax return. You will owe capital gains tax on any profits.
For in-kind transfers (Scenario B): There is no immediate tax implication. Your cost basis for your investments will transfer with them to the new brokerage.
For IRAs: If you close a Vanguard IRA and take a distribution, it will be considered a taxable event, and you may be subject to a 10% penalty if you are under age 59 1/2. You must do a direct rollover to another IRA custodian to avoid taxes and penalties.
Consult a tax professional if you have any questions about your specific situation.
Related FAQs
How to close a Vanguard Roth IRA account?
To close a Vanguard Roth IRA, you can either liquidate your assets and take a distribution (which may be tax-free if you meet the requirements, but consult a tax advisor) or, more commonly, do a direct rollover to a Roth IRA at another brokerage. The new brokerage will initiate the transfer for you.
How to transfer a Vanguard account to Fidelity?
You initiate the transfer from the Fidelity side. Log into your Fidelity account, navigate to the "Transfer" or "Move an account" section, and fill out the ACAT transfer form. You will need your Vanguard account number and a recent statement.
How to transfer a Vanguard account to Charles Schwab?
Similar to Fidelity, you initiate the process from your Charles Schwab account. You'll need to fill out a transfer form, providing them with your Vanguard account details.
How to withdraw all money from a Vanguard account?
First, sell all your holdings within the account. Once the trades have settled, you will have a cash balance. You can then transfer this cash to your linked bank account via an ACH transfer or a wire transfer.
How to do an ACAT transfer from Vanguard?
You don't do it from Vanguard's side. The receiving brokerage initiates the ACAT (Automated Customer Account Transfer Service) transfer. You fill out a form with your new brokerage, and they will contact Vanguard to move your assets.
How to close a Vanguard brokerage account with a negative balance?
You must first resolve the negative balance by depositing funds into the account. Vanguard will not allow you to close an account with a negative balance.
How to sell all shares in a Vanguard account?
Log into your Vanguard account, go to the "Trade" or "Transact" section, and place sell orders for all your mutual funds, ETFs, and other holdings. Make sure to sell 100% of your shares.
How to contact Vanguard customer service to close my account?
You can call Vanguard's customer service number, which is typically found on their website under the "Contact Us" section. Be prepared to provide your account information and verify your identity.
How to find my Vanguard account number?
Your Vanguard account number is located on your account statements, on the account summary page when you log in online, or on your welcome letter.
How to avoid capital gains when closing a Vanguard account?
You can avoid capital gains by doing an in-kind transfer of your assets to another brokerage. If you sell your assets, you will incur capital gains or losses, which are reportable for tax purposes.