Of course! Let's get you on the right path to transferring your Roth IRA. It's a common and straightforward process, and we'll break it down step-by-step.
So, you're ready to move your Roth IRA from Vanguard to Fidelity? Let's do this!
Transferring your Roth IRA is a smart move, whether you're looking for different investment options, a more user-friendly platform, or simply want to consolidate your accounts. The good news is that this process, when done correctly, is a non-taxable event, meaning you won't incur any penalties or have to pay taxes on the transfer. The key is to execute a direct transfer or a trustee-to-trustee transfer, which we will focus on.
Let's dive in.
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| How To Transfer Roth Ira From Vanguard To Fidelity |
Step 1: Open Your New Fidelity Roth IRA Account
First and foremost, before you do anything at Vanguard, you need to have a new home for your money. Think of it like getting the keys to your new house before you start packing up your old one.
Ready to get started?
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Head over to the Fidelity website and begin the process of opening a new Roth IRA. If you already have other Fidelity accounts, you might be able to simply add a new Roth IRA to your existing profile. If you're new to Fidelity, you'll need to go through the account opening process.
Tip: When you're asked how you want to fund the new account, choose "Transfer an account from another firm" or a similar option. This is the crucial first step in initiating the transfer from Fidelity's side.
Step 2: Initiate the Transfer from Fidelity
This is the most important step in the entire process. You want Fidelity to pull the assets from Vanguard, not for you to take a distribution from Vanguard and then deposit it into Fidelity. This is what's known as the "direct transfer" method, and it ensures a seamless, tax-free transfer.
Here's how to do it:
Log in to your new Fidelity account.
Navigate to the "Transfers" or "Move Money" section.
Look for an option like "Transfer an account to Fidelity" or "Transfer assets from another firm."
You will be asked to provide information about your Vanguard Roth IRA. You'll need details like:
Your Vanguard account number. You can find this on your statements or by logging into your Vanguard account.
The type of account: Roth IRA. Be very, very careful to select the correct account type. Transferring a Roth IRA to a Traditional IRA, or vice-versa, is a taxable event.
Your name and Social Security number, exactly as they appear on your Vanguard account. Any discrepancy could delay the transfer significantly.
A recent account statement from Vanguard. You'll likely need to upload a digital copy of this statement, so have one ready to go.
Key Takeaway: By initiating the transfer from Fidelity's end, you empower them to handle the communication and logistics with Vanguard, making it a much smoother process for you.
Step 3: Decide How to Transfer Your Investments
This is a critical decision that can affect how quickly your money is available to trade. You have two primary options:
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Sub-heading: Transferring "in-kind"
This is the most common and often recommended method. When you transfer "in-kind," you are moving your existing investments (like Vanguard ETFs or mutual funds) directly to Fidelity without selling them. This means you maintain your investment positions and their cost basis, and you stay invested in the market during the transfer period.
Important Note: Not all investments can be transferred "in-kind." While most ETFs are transferable, some Vanguard mutual funds may not be directly available for purchase at Fidelity. If you hold proprietary Vanguard mutual funds, Fidelity may require them to be liquidated.
Sub-heading: Transferring as "cash"
If you choose to transfer as cash, Vanguard will sell all your investments before sending the cash to Fidelity. Once the cash arrives at Fidelity, you can then reinvest it in new funds of your choice.
Consider this: While this gives you a clean slate, it can also create a period where your money is not invested in the market, a concept known as "time out of market." This can be risky if the market goes up while your money is in transit.
What to do if you have Vanguard mutual funds?
If your Vanguard Roth IRA is primarily invested in Vanguard mutual funds, you have a couple of options to consider before initiating the transfer:
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Liquidate the mutual funds at Vanguard: Sell the mutual funds and have the cash transferred to Fidelity. You can then reinvest in Fidelity's funds or Vanguard ETFs once the transfer is complete.
Convert to Vanguard ETFs first (at Vanguard): You can often exchange your Vanguard mutual funds for their ETF counterparts at Vanguard without a taxable event. This is a great option if you want to keep your investment exposure and the funds are available as ETFs. Then, transfer the ETFs "in-kind" to Fidelity. This is a very popular strategy for Bogleheads and other investors who prefer to stick with Vanguard's low-cost funds.
Step 4: Await the Transfer and Track its Progress
Once you have submitted the transfer request to Fidelity, they will take over. The process typically takes 3-5 business days for an "in-kind" transfer, but it can take longer depending on the investments being transferred and the responsiveness of Vanguard.
Stay Engaged: Fidelity's website will have a status tracker where you can monitor the progress of your transfer. You'll be able to see when the request has been sent to Vanguard, when the assets are being processed, and when they have arrived in your Fidelity account.
Step 5: Reinvest Your Funds (if necessary)
Once the transfer is complete, your assets will arrive in your Fidelity Roth IRA. If you transferred "in-kind," your investments will be there, and you're good to go!
If you transferred as cash, or if some of your mutual funds were liquidated, the funds will be held in a "settlement fund" or cash position. Now is the time to decide what to invest in and place your buy orders.
Take Action: Don't let your money sit in cash! The purpose of a Roth IRA is to grow tax-free, and you need to be invested for that to happen.
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10 Related FAQ Subheadings
How to check the status of my transfer? You can check the status of your transfer by logging into your Fidelity account and navigating to the "Transfers" or "Activity" section. Most brokerage platforms have a dedicated tracker for account transfers.
How to avoid taxes when transferring a Roth IRA? To avoid taxes, you must perform a "direct transfer" or "trustee-to-trustee transfer" from one Roth IRA to another. Do not take a distribution (a check made out to you) as this could trigger taxes and penalties if not deposited into a new Roth IRA within 60 days.
How to transfer only a portion of my Roth IRA? Yes, you can do a partial transfer. When you initiate the transfer request with Fidelity, you will be given the option to transfer a full account or select specific assets or a portion of the total value.
How to handle fractional shares during the transfer? Vanguard may not be able to transfer fractional shares of ETFs or stocks. In that case, they will sell the fractional portion and send the cash proceeds to Fidelity as part of the transfer.
How to find my Vanguard account number? Your Vanguard account number can be found on your account statements, trade confirmations, or by logging into your Vanguard online portal.
How to handle Vanguard mutual funds that are not available at Fidelity? You can either sell them at Vanguard and transfer the cash, or you can exchange them for the equivalent Vanguard ETF before initiating the transfer. This allows you to keep your exposure to the same underlying investments.
How to know if my Vanguard funds are transferable? You can check with Fidelity's customer service or look up the fund's ticker symbol on their website to see if it's available for purchase. Most Vanguard ETFs are easily transferable to Fidelity.
How to avoid transfer fees? Some custodians may charge an account closing or transfer fee. However, many receiving custodians like Fidelity will offer to reimburse these fees to win your business. Be sure to ask about this when you open your new account.
How to deal with a transfer that is taking a long time? First, check the status tracker on Fidelity's website. If there's a holdup, it's often due to mismatched information (like a name or address discrepancy). Contact Fidelity's customer service for assistance in resolving any issues.
How to avoid "time out of market" during the transfer? The best way to avoid being out of the market is to transfer your investments "in-kind," if possible. This keeps your money invested and subject to market fluctuations during the transfer period.
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