A Comprehensive Guide: How to Move Your IRA from Vanguard to Fidelity
So, you've decided to move your Individual Retirement Account (IRA) from Vanguard to Fidelity. Maybe you're drawn to Fidelity's zero-expense-ratio index funds, their user-friendly platform, or perhaps you want to consolidate your accounts in one place. Whatever your reason, transferring an IRA is a common and straightforward process. Don't worry, it's not as intimidating as it might seem!
Let's break down the process step-by-step to ensure a smooth, hassle-free transition.
Step 1: Get Ready to Make the Move!
Before you do anything else, let's get you prepared. Think of this as gathering your supplies for a big trip.
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Do you have all your account information? Dig out a recent account statement from your Vanguard IRA. You'll need your account number, the type of IRA (Traditional, Roth, SEP, etc.), and the names and tickers of the investments you hold.
Decide how you want to transfer. This is a crucial decision. You have two main options:
In-kind transfer: This is where you move your investments exactly as they are—stocks, ETFs, and mutual funds—from Vanguard to Fidelity. This is often the simplest and most common method. Your investments remain invested and you stay in the market. This is the best option if Fidelity offers the same funds you hold at Vanguard.
Liquidate and transfer cash: With this option, you sell all your investments at Vanguard and transfer the cash to Fidelity. Once the cash arrives at Fidelity, you can then reinvest it. Be aware of potential tax implications, especially with a Traditional IRA, and the risk of being out of the market during the transfer.
Understand the transfer fees. While Fidelity generally doesn't charge for incoming transfers, Vanguard may have a fee for a full account transfer or closure. It's a good idea to check Vanguard's fee schedule or call them to confirm any potential charges. Many brokers, including Fidelity, will sometimes reimburse transfer-out fees from the other institution, so be sure to ask!
Step 2: Open Your New Fidelity IRA
You can't move your IRA to a new home until you have a new home to move it to! This is where you'll set up the account at Fidelity to receive your assets from Vanguard.
Visit the Fidelity website. Navigate to the retirement or IRA section and select "Open an Account."
Choose the correct IRA type. It is absolutely vital that you open the same type of IRA you are transferring. If you're moving a Roth IRA from Vanguard, you must open a Roth IRA at Fidelity. The same goes for Traditional IRAs. Mismatched account types can lead to a taxable event and penalties!
Complete the application. This process is usually quite simple and can be done online in just a few minutes. You'll provide your personal information, employment details, and a few other required fields.
Step 3: Initiate the Transfer from Fidelity's Side
This is the most important step. You will initiate the transfer from Fidelity, not Vanguard. Fidelity will do the heavy lifting for you by requesting the assets from Vanguard.
Log in to your new Fidelity account.
Look for the "Transfer an Account" or "Transfer of Assets (TOA)" section. This is usually found under the "Accounts & Trade" or "Customer Service" menu.
Select "Transfer an IRA." You will be asked to identify the firm you are transferring from (Vanguard) and provide your Vanguard account number.
Specify the type of transfer. This is where you'll choose between a full transfer (moving everything) or a partial transfer (moving specific assets). If you're doing a partial transfer, you'll need to specify which funds or stocks you want to move.
Provide a recent Vanguard statement. Fidelity will likely ask you to upload a recent Vanguard statement to verify your account information and holdings. Having this digital copy ready will speed up the process.
Review and submit. Carefully review all the information you've entered before submitting the transfer request. Any discrepancies in names, addresses, or account numbers can cause significant delays.
Step 4: The Waiting Game (and What Happens Behind the Scenes)
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Once you've submitted the request, Fidelity will take over. They will send a "Letter of Acceptance" to Vanguard, formally requesting the transfer.
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Fidelity contacts Vanguard. Fidelity's back office will communicate with Vanguard to process the transfer.
Vanguard processes the request. Vanguard will review the request and, assuming all the information is correct, will begin the process of releasing your assets.
The transfer is completed. The assets will be moved from your Vanguard account to your new Fidelity account.
Keep an eye on your accounts. You can typically track the progress of your transfer on the Fidelity website. You'll likely see a "pending" status, and then your assets will appear in your Fidelity account once the transfer is complete. Most transfers take 3-5 business days for an electronic transfer, but some may take longer, especially if paperwork is required.
Important Note: During the transfer, your Vanguard account may show a temporary "freeze" on the assets being moved. This is normal and prevents you from trading those specific securities while the transfer is in progress.
Step 5: Verify and Reinvest (if necessary)
Once the assets are in your Fidelity account, you'll need to do a final check.
Verify the transfer. Log in to your Fidelity account and confirm that all the assets you intended to transfer have arrived.
Check for cash and fractional shares. Sometimes, fractional shares (e.g., 1.5 shares of a stock) cannot be transferred in-kind and are liquidated into cash. You can use this cash to buy a whole share or invest in something else.
Reinvest if you chose to liquidate. If you chose the "liquidate and transfer cash" option, now is the time to put that money to work! You can buy Fidelity's low-cost index funds, ETFs, or individual stocks.
Congratulations! You have successfully moved your IRA from Vanguard to Fidelity.
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| How To Move Ira From Vanguard To Fidelity |
10 Related FAQ Questions
Here are some quick answers to common questions about transferring your IRA:
1. How to tell if my transfer will be in-kind or cash? When you initiate the transfer at Fidelity, you'll be given the option to choose between an in-kind transfer or a liquidation transfer. An in-kind transfer is only possible if Fidelity offers the same funds you hold at Vanguard.
2. How to avoid taxes and penalties during the transfer? To avoid taxes and penalties, ensure you are performing a direct rollover or transfer. This means the money is transferred directly from one custodian to another. Do not receive the money yourself (an indirect rollover) unless you are prepared to redeposit it within 60 days and potentially deal with tax withholding.
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3. How to check the status of my transfer? You can typically track the status of your transfer by logging into your Fidelity account and navigating to the "Transfer of Assets" or "Account Transfer" section.
4. How to handle a partial transfer? When initiating the transfer, you will have the option to select "partial transfer" and specify the exact assets and quantities you wish to move. This is useful if you want to leave some investments behind at Vanguard.
5. How to know if I have to sell my Vanguard mutual funds? If you own Vanguard-specific mutual funds (like Admiral Shares) and Fidelity doesn't offer them, they will likely need to be liquidated. However, many Vanguard ETFs are available at Fidelity and can be transferred in-kind.
6. How to transfer an inherited IRA? Transferring an inherited IRA has specific rules. You must open a new inherited IRA at Fidelity with the same beneficiary registration and initiate the transfer from Fidelity's side.
7. How to transfer with a different last name or address? If your name or address doesn't match on both accounts, you'll likely need to provide additional documentation, such as a marriage certificate, divorce decree, or a "One-and-the-Same Letter," to prove your identity and ownership.
8. How to deal with a transfer that is taking too long? If your transfer is taking longer than expected, first check the status on the Fidelity website. If there's no update, contact Fidelity's customer service. They can investigate the reason for the delay. Common reasons include mismatched information or required paperwork.
9. How to transfer my IRA if I have outstanding trades? Before you initiate the transfer, make sure there are no outstanding trades or pending transactions in your Vanguard IRA. These can cause the transfer to be rejected or delayed.
10. How to ensure I don't lose money during the transfer? For an in-kind transfer, you will remain invested in the market, so your portfolio value will fluctuate with market movements, just as it would normally. For a cash transfer, there is a small period when your money is not invested, so you could miss out on gains (or avoid losses) during that time. A direct, in-kind transfer is the best way to minimize this risk.
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