Vanguard or Fidelity for Roth?

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larrymoencurly said: For any given catagory of funds, how well have past returns predicted future returns, and ow well have expense ratios predicted future returns?expanse ratios and their derivatives are the only significant variables

By buying a Vanguard mutual fund through Ameritrade though, isn't that a way to avoid the $10 annual fee if you are below their minimum balance. I mean you pay the one time stock trade fee but as lond as it is a no-load fund there is no maintainence fee (atleast that's what my thinkin was when I bought a vanguard mutual fund 2 years ago)

kurfali said: Remember, you MUST open your ROTH by the end of the year, so you only have a day, if that. You can fund it up to 4/15, but you have to open it this year. hope this helps, this is my first post on FW.

is this true? i was hoping to open up a fidelity account today and fund 06 and 07..

gobucs007 said: kurfali said: Remember, you MUST open your ROTH by the end of the year, so you only have a day, if that. You can fund it up to 4/15, but you have to open it this year. hope this helps, this is my first post on FW.

is this true? i was hoping to open up a fidelity account today and fund 06 and 07..


not true. You can open the account today and fund both 06 and 07.

gobucs007 said: kurfali said: Remember, you MUST open your ROTH by the end of the year, so you only have a day, if that. You can fund it up to 4/15, but you have to open it this year. hope this helps, this is my first post on FW.

is this true? i was hoping to open up a fidelity account today and fund 06 and 07..
Absolutely not.

You can open and fund ANY ira(including SEP-IRA) until the tax filing deadline(this year April 17th)

Check Vanguard's or Fidelity's web sites, they will confirm this.

missmatch said: By buying a Vanguard mutual fund through Ameritrade though, isn't that a way to avoid the $10 annual fee if you are below their minimum balance. I mean you pay the one time stock trade fee but as lond as it is a no-load fund there is no maintainence fee (atleast that's what my thinkin was when I bought a vanguard mutual fund 2 years ago)

bump for more response

missmatch said: By buying a Vanguard mutual fund through Ameritrade though, isn't that a way to avoid the $10 annual fee if you are below their minimum balance. I mean you pay the one time stock trade fee but as lond as it is a no-load fund there is no maintainence fee (atleast that's what my thinkin was when I bought a vanguard mutual fund 2 years ago)Generally, but not always, you avoid fees like that by buying through a third party. But, at least right now, it's $50 to buy a fund at Ameritrade, vs. free if you go through the fund company. Do you really expect to go 5 years without reaching the balance to avoid Vanguard's fee by buying directly?

Fidelity or Vanguard - if you have 25k you can have both funds families for free:
Thread is here:
WellFargo PMA

When connected to a PMA checking account and if you have 25k of total assets (not just IRA) with Wells Fargo (even mortgage balances count) You can will have 100 trades/year with quite a few fund families (including Vanguard and Fidelity) for free. I think it's great option for those having the necessary amount of assets and looking for a fund supermarket. Review the thread for details.

What fund do you recommend from Vangaurd. I'm looking for a growth fund for retirement.

Trying to decide between the Growth Index Fund or the US Growth Investor. Thanks

Mordoch said: kaiotes said: if don't have i think 10k combined in Vanguard accounts, u will get hit 20 maintainence fees for each MF that you own. very misleading if you ask me...
This is wrong when talking about Roth IRAs. You need 5,000 dollars in a fund by one year after you initially invested in it to avoid any fees, otherwise you get charged 10$ for each fund in maintenance fees per year.

However, the Vanguard Star Fund has a 1,000 dollar minimum at which point you can avoid fees, and happens to do a rather good job of diversifying your investment.




(1). Looks like Roth IRA's which invest in their Target Retirement Funds have $0 maintenance fees and avoid the $10 custodial fee if balance is >$5K:



---------------------------------------------

Target Retirement Funds

12b-1 Fee None
Account Maintenance Fee None
Purchase Fee None
Redemption Fee None
Low Balance Fee

An annual $10 fee is generally deducted for each nonretirement fund account with a balance of less than $2,500. In addition, the fund account may be liquidated if the balance falls below $500. If your Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, as well as nonretirement fund accounts) total $50,000 or more, the low-balance fee may not apply.
IRA Custodial Fees

Vanguard charges the following custodial fees:

Traditional, Roth, and SEP IRAs. $10 a year for each fund account with a balance of less than $5,000. This fee may not apply if the IRA owner’s Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, and nonretirement accounts) total $50,000 or more.

SIMPLE IRAs. $25 a year for each fund account. This fee may not apply if the IRA owner’s Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, and nonretirement accounts) total $100,000 or more.

403(b)(7)s. $15 a year for each fund account.

Education Savings Accounts. $10 a year for each fund account with a balance of less than $5,000.

-----------------------------------



(2). However, if you open a Roth IRA and pick your own funds, say the Total Stock Market Index Fund, you'll get a $10 custodial fee for accounts less than $10K, but avoid the custodial fee for at least having $5K.



----------------------------------------------------------
Total Stock Market Index Fund

12b-1 Fee None
Account Maintenance Fee

Each Vanguard index fund (except the REIT Index Fund) charges a maintenance fee if the balance is below $10,000. The fee of $10 is deducted annually, or $2.50 per quarter for funds that distribute dividends more than once a year. If your distribution is less than the fee, a fraction of a share may be redeemed to make up the difference. Note that this fee applies to each fund account. For example, if you have an account with two index funds, each with less than $10,000, you will be charged a total of $20 a year. Similarly, if you have the same index fund in two different accounts (e.g., individual account, joint account, traditional IRA, Roth IRA, or any two accounts under different registrations or account numbers), each with less than $10,000, you will be charged a total of $20 a year.
Purchase Fee None
Redemption Fee None
Low Balance Fee

An annual $10 fee is generally deducted for each nonretirement fund account with a balance of less than $2,500. In addition, the fund account may be liquidated if the balance falls below $500. If your Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, as well as nonretirement fund accounts) total $50,000 or more, the low-balance fee may not apply.
IRA Custodial Fees

Vanguard charges the following custodial fees:

Traditional, Roth, and SEP IRAs. $10 a year for each fund account with a balance of less than $5,000. This fee may not apply if the IRA owner’s Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, and nonretirement accounts) total $50,000 or more.

SIMPLE IRAs. $25 a year for each fund account. This fee may not apply if the IRA owner’s Vanguard account assets (including IRAs, employer-sponsored plans, brokerage accounts, annuities, and nonretirement accounts) total $100,000 or more.

403(b)(7)s. $15 a year for each fund account.

Education Savings Accounts. $10 a year for each fund account with a balance of less than $5,000.
----------------------------------------------



(3). It seems pretty explicit in the last sentence of the maintenance fee section that even if the fund invested is in a Roth IRA, if it is less than $10K, you will incur a $10 maintenance fee (although bypassing the CUSTODIAL fee if at least $5K)

I know this thread is vanguard v/s fidelity. Etrade is giving 50 free trades and they too claim to have No load no transaction fee funds. I havent checked the expense ratios though.
Any thoughts about it??
- naroowal

naroowal said: I know this thread is vanguard v/s fidelity. Etrade is giving 50 free trades and they too claim to have No load no transaction fee funds. I havent checked the expense ratios though.
Are their NTF funds the ones you want to use? Pick a fund first, then you'll have an easier time choosing where to hold it.

I hate to hijack this thread but I'm sure someone reading this can answer my question. I notice a few references to people needing over $50k with Vanguard to be eligible for certain funds and reduced fees. My situation is similar to the OP. I am 27 and am looking to open up my first IRA. I'd like to avoid fees where possible and would be planning to just put in the standard 4,000 for year one. Now my question is this. I have a 401k from a company I left a few years ago with Vanguard that has about $40,000 in it. I have left it there simply because my return has been very strong over the past couple of years. So does this money count towards that $50k amount that everyone mentions or do I specifically need to have 50k in more standard funds.

Thanks in advance.

superfitz said: I am 27 and am looking to open up my first 401k. I'd like to avoid fees where possible and would be planning to just put in the standard 4,000 for year one.

I think you mean IRA, or else that statement does not make much sense. I will assume as much to answer your question.

superfitz said: I have a 401k from a company I left a few years ago with Vanguard that has about $40,000 in it. ... So does this money count towards that $50k amount

Yes. Since that 401k is under your social (even though it is an employer-sponsered plan), it is part of your "household" balance and would count. However, don't let that stop you from doing whatever you wish with your investment funds.

I have Vanguard and am happy to stay, but don't let that be the only reason. Most of $50k thing you see is so you can have Admiral shares, which have a lower expense ratio. Admiral funds won't apply to the 401k (since the employer chooses what funds are available and the class available is based on the employer's assets with Vanguard). So your real benefit would be lower expense rations on the funds outside the 401k.

I am sure there are other reasons and other functions of the $50k barrier to entry, but that (in my opinion) is the biggest one most people talk about.

More info can be found https://flagship.vanguard.com/VGApp/hnw/content/Funds/FundsAdmiralSharesOverviewJSP.jsp

I think you mean IRA, or else that statement does not make much sense. I will assume as much to answer your question.



Cyclone, Yes I meant to say IRA. I will edit my original post. Thanks for being able to put 2 and 2 together there. Also, thanks for the info. I'll look up the link and do my research on Admiral Shares.

Getting back to the original thread, while I do not have a Roth, I am extremely impressed with my service and returns so far from Vanguard, though I can't compare it to Fidelity as I have never used them.

More correctly, Admiral shares require $100K in that particular fund, or $50K if you have had the non-Admiral counterpart for more than 5 years. Fees get waived if you attain Voyager (>=$250K assets) or Flagship (>= $1M assets) status with Vanguard.

Voyager status will give you: No account maintenance fees, IRA fees, or wire transfer fees; and the following apply to the $250K needed: Including assets in mutual funds, employer-sponsored retirement plans, brokerage accounts, and annuities.


CycloneFW said: superfitz said: I am 27 and am looking to open up my first 401k. I'd like to avoid fees where possible and would be planning to just put in the standard 4,000 for year one.

I think you mean IRA, or else that statement does not make much sense. I will assume as much to answer your question.

superfitz said: I have a 401k from a company I left a few years ago with Vanguard that has about $40,000 in it. ... So does this money count towards that $50k amount

Yes. Since that 401k is under your social (even though it is an employer-sponsered plan), it is part of your "household" balance and would count. However, don't let that stop you from doing whatever you wish with your investment funds.

I have Vanguard and am happy to stay, but don't let that be the only reason. Most of $50k thing you see is so you can have Admiral shares, which have a lower expense ratio. Admiral funds won't apply to the 401k (since the employer chooses what funds are available and the class available is based on the employer's assets with Vanguard). So your real benefit would be lower expense rations on the funds outside the 401k.

I am sure there are other reasons and other functions of the $50k barrier to entry, but that (in my opinion) is the biggest one most people talk about.

More info can be found https://flagship.vanguard.com/VGApp/hnw/content/Funds/FundsAdmiralSharesOverviewJSP.jsp

geckojohn said: What fund do you recommend from Vanguard. I'm looking for a growth fund for retirement.

Trying to decide between the Growth Index Fund or the US Growth Investor. Thanks



I am not going to recommend specific Vanguard funds as I believe that violates the forum rules. However, the second fund you mentioned is one of the poorest performing funds offered by Vanguard. Compare the returns over 1, 3, 5 and 10 years versus the S&P 500. Also, they have changed fund maangers in the recent past.

There are a half dozen growth and aggressive growth funds that are offered by Vanguard that would be a better investment/

Can anybody help me find Vanguard's ACH routing number? Striking out here with searches...

I want to setup transfers between Fidelity and Vanguard...looks like right now Vanguard's MMF's are higher...

FYI Vanguard just dropped ALL its low balance fees if you sign up for electronic mailing rather than paper.
http://www.fatwallet.com/t/52/725903/

alchemize said: Can anybody help me find Vanguard's ACH routing number? Striking out here with searches...

I want to setup transfers between Fidelity and Vanguard...looks like right now Vanguard's MMF's are higher...


You have to have a Vanguard Brokerage Advantage account that can be linked to your Vanguard MM. With Advantage, you then have what looks like a checking account via PNC Bank with a routing number that can be used for pushing money into your linked Vanguard MM. I can confirm this works at other financial institutions although I have no experience with Fidelity. (but you do have to pay fees for Advantage unless you qualify for Flagship status; I think Voyager status gets you a reduced fee)

Or else if you have a routing number for Fidelity, then use it at Vanguard to pull the money into your MM there.

I have a very basic question about a Roth IRA. I have been researching the difference between a traditional and a Roth IRA and understand most key points b/w the two.

However, one issue I am finding is about the clarity on withdrawl of contributions from a Roth IRA. There are a lot of explanations around but none in plain english. I even read the IRS pub 590 on it but it is the most cryptic. May be one of you can clarify it.

I read that distributions from "Contributions" can be withdrawn penalty and tax free from a Roth IRA even if the account is not 5 years old and the participant is not 59 1/2 years of age.

I want to know exactly how this works, lets say I contributed $ 4K for the next 3 years - $ 12K worth of "Contributions" earned $ 3K in earnings over the 3 years, so the total in the account is $ 15K.

Does this mean that I can potentially withdraw all of the $ 12k that is classified as original "contributions" without any penalties and would not pay any taxes on them either in the year that I withdraw them?

I would appreciate if someone can clarify this.

Cataphract said: I have a very basic question about a Roth IRA. I have been researching the difference between a traditional and a Roth IRA and understand most key points b/w the two.

However, one issue I am finding is about the clarity on withdrawl of contributions from a Roth IRA. There are a lot of explanations around but none in plain english. I even read the IRS pub 590 on it but it is the most cryptic. May be one of you can clarify it.

I read that distributions from "Contributions" can be withdrawn penalty and tax free from a Roth IRA even if the account is not 5 years old and the participant is not 59 1/2 years of age.

I want to know exactly how this works, lets say I contributed $ 4K for the next 3 years - $ 12K worth of "Contributions" earned $ 3K in earnings over the 3 years, so the total in the account is $ 15K.

Does this mean that I can potentially withdraw all of the $ 12k that is classified as original "contributions" without any penalties and would not pay any taxes on them either in the year that I withdraw them?

I would appreciate if someone can clarify this.


Yes.

You are correct about withdrawing your contributions to the Roth IRA without penalty or tax hit. You can also withdraw the gains but pay the 10% penalty and taxes, if doing it before 59 1/2. But the earnings (not contributions) have to remain in the account for 5 tax years before you are eligible to withdraw. For example, in March 2004, you have contributed for 2003 tax year and possibly for later years. You are eligible for withdrawal of earnings starting from Jan 1st, 2008 (or is it the April 15th?) but the contributions can be withdrawn anytime.

tobands said: But the contributions have to remain in the account for 5 tax years before you are eligible to withdraw. For example, in March 2004, you have contributed for 2003 tax year and possibly for later years. You are eligible for withdrawal of all your contributions starting from Jan 1st, 2008 (or is it the April 15th?)
From Vanguard Website
For accounts held less than 5 years and the owner is under age 59 1/2: Distributions from contributions are tax-free and penalty-free.
I think this is the confusing part, from what I read here in the withdrawl penalties line, it is implying that contibutions can be withdrawn without penalties or tax liability even if the account is not 5 years old and you are suggesting that it is not the case.

Edit - fixed the link.

.

tobands said: But the earnings (not contributions) have to remain in the account for 5 tax years before you are eligible to withdraw.

Ok. That makes sense.

So I finally decided I was throwing money away paying .18% and because Roth's are contribution limited I won't be reaching Admiral shares any time soon. So I wanted to switch to Fidelity for some tasty .1% action.

Is anyone else alarmed by Fidelity's casual mention of:
Once Fidelity receives your paperwork and determines it is in good order, most transfers take 3 - 5 weeks to complete.


So even if my paperwork is in "good order" my precious IRA could be in the ether for 3-5 weeks. If those are the "wrong" 3-5 weeks it could take my IRA decades if ever to "earn back" the lost growth at .08% per year.

You can transfer over index funds from Vanguard to Fidelity. However, to sell Vanguard funds and purchase Fidelity funds there is a $75 fee. Again, it could take 3-5 years to recover that fee with my $20,000 level and a .08% differential.

Anyone figure out a way to convert without getting hosed on conversion time or fees?

ScootyPuffSr said: So I finally decided I was throwing money away paying .18% and because Roth's are contribution limited I won't be reaching Admiral shares any time soon. So I wanted to switch to Fidelity for some tasty .1% action.

Is anyone else alarmed by Fidelity's casual mention of:
Once Fidelity receives your paperwork and determines it is in good order, most transfers take 3 - 5 weeks to complete.


So even if my paperwork is in "good order" my precious IRA could be in the ether for 3-5 weeks. If those are the "wrong" 3-5 weeks it could take my IRA decades if ever to "earn back" the lost growth at .08% per year.

You can transfer over index funds from Vanguard to Fidelity. However, to sell Vanguard funds and purchase Fidelity funds there is a $75 fee. Again, it could take 3-5 years to recover that fee with my $20,000 level and a .08% differential.

Anyone figure out a way to convert without getting hosed on conversion time or fees?


Is that $75 fee to move the same index funds with Vanguard to Fidelity's brokerage account? or is there a redemption fee for cashing out your IRA with Vanguard and sending it over as cash to Fidelity (to purchase whatever you want)?

As far as the 3-5 weeks:
Legally once Fidelity receives the physical check from Vanguard, they must process the financial item the same day it is received (assuming everything is in good order: you have a Fidelity account and the paperwork set up, the check properly references the right account to put the money in, you have investment instructions with Fidelity), or if they cannot, it still must receive that day's trade date.

It isn't always 3-5 weeks of limbo to process a transfer of assets. The actual amount of time the money is out of an IRA account should only be a few days, the amount of time it takes for Vanguard to process a redemption/sale, and to send the check to Fidelity. The 3-5 weeks is to cover their backs in case the paperwork portion takes more time. Different custodians will not always accept requests for transfers, or have their own paperwork requirements, and sending rejection letters and correspondence can take time. The fastest way would be to contact both sides to ensure your request is accepted at the resigning company and/or if you need to submit specific paperwork yourself.

-edit-
want to clarify even if the paperwork takes 3-5 weeks to clear, the money will only leave an account for the few days it takes to mail out the check. It still will incur all gains/losses up until Vanguard determines its ok to send the money onward, even if the paperwork sorting takes weeks or months.

Bobalude said:
Is that $75 fee to move the same index funds with Vanguard to Fidelity's brokerage account? or is there a redemption fee for cashing out your IRA with Vanguard and sending it over as cash to Fidelity (to purchase whatever you want)?


The transfer is free but to sell Vanguard funds inside of a Fidelity IRA it will cost $75 per transaction.


It isn't always 3-5 weeks of limbo to process a transfer of assets.


It doesn't matter if it is always, all I care about is my case.

I would be switching for .08% savings. Even "a few days" as you said could be 1% or more. That means it might take me a decade to make up the difference. In a decade I will have admiral shares ($50K+10 years).

I guess I won't switch.

ScootyPuffSr said:

The transfer is free but to sell Vanguard funds inside of a Fidelity IRA it will cost $75 per transaction.


Why can't you sell the Vanguard funds before the transfer? Anyway, if you transfer more than $25,000 you will receive six months of commission-free trades-- not sure if it applies to mutual fund trading.

free trades for up to a year

I have a fidelity brokerage account, and aside from owning fidelity stock funds (and money market fund) i have funds from Royce that i purchased through fidelity...i did pay a one time $75 fee for the purchase (because they weren't NTF or as they call them No Transaction Fee funds, which some are)...but there is no charge for redeeming that i know of....sounds to me like they would be re-purchasing the vanguard index fund, which is why there would be a $75 charge.....If you invested in a Fidelity index fund, there would be no purchase charge, of course....

bbz said: ScootyPuffSr said:

The transfer is free but to sell Vanguard funds inside of a Fidelity IRA it will cost $75 per transaction.


Why can't you sell the Vanguard funds before the transfer?


Because then the funds are not in the market for 3-5 weeks. What is the point of saving .08% if I could potentially miss a 2% or more rally?


Anyway, if you transfer more than $25,000 you will receive six months of commission-free trades-- not sure if it applies to mutual fund trading.


Nope, doesn't apply to mutual fund trading. I asked and they were very clear it was stocks only.

craig10x said: I have a fidelity brokerage account, and aside from owning fidelity stock funds (and money market fund) i have funds from Royce that i purchased through fidelity...i did pay a one time $75 fee for the purchase (because they weren't NTF or as they call them No Transaction Fee funds, which some are)...but there is no charge for redeeming that i know of....sounds to me like they would be re-purchasing the vanguard index fund, which is why there would be a $75 charge.....If you invested in a Fidelity index fund, there would be no purchase charge, of course....

Thanks Craig. I reread the "TF Fund" rules and it does explicitly say that there will be a fee for buying TF funds and there will not be a fee for selling. Since the shares are already purchased, while still with Vanguard at Vanguard, it seems like I could transfer for no fee. Then I could sell for no fee and buy Fidelity funds (or whatever NTF funds I wanted) the same closing day or next.

Awesome, thank you guys.

your welcome Scooty It's been awhile since i did that (about 3 years ago) but i did recall that there is no fee to redeem shares when you buy other fund family mutual funds through fidelity brokerage...just the one time $75 transaction fee to buy...

If it is a NTF (No Transaction Fee) fund then there is no fee from fidelity at all....however, in that case, i think if you redeem early (like within 6 months) then Fidelity grabs the $75 when you redeem....but that only applies to the NTF funds that you buy outside of fidelity)...

Just wanted to clarify the two different situations with that...



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