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Roth IRA and Vanguard Brokerage

I recently tried to move a Roth IRA from Vanguard to TRP. However, according to Vanguard I have too sell the Roth so the money goes into Money Market and then it can be transferred to TRP.
Vanguard Customer service said they couldn’t advise me any further as they didn’t know if this would be a taxable event.

The Money would go into TRP Roth IRA. So my question is if I sell it and move to TRP as all Roth Contributions, would the IRS tax me on selling Roth IRA. I’m only 58.
Thanks
John

Comments

  • edited November 20
    Transactions within Roth IRA don't create taxable event, nor do transfer from one R-IRA to another.
    Some like to do in-kind transfers, but that is not possible when funds or fund classes are not supported by the new R-IRA platform/sponsor. And then one has to sell into money-market and transfer those funds as cash.
    You can fill out asset transfer paperwork with TRP and let them handle it.
  • Thanks Yogi
  • edited November 20
    Do you have to sell the Roth because your Vanguard holdings are unavailable at TRP?
    If so, you may want to consider exchanging your Vanguard holdings for ones which are available at TRP prior to the transfer.
    This should enable in-kind transfers of your Roth assets from Vanguard to TRP.
    With in-kind transfers, your Roth will not be "out of the market" which may or may not be beneficial.
    I transferred my Roth IRA from Fidelity to Vanguard a few years ago.
    Prior to the transfer, I exchanged my Fidelity holdings to enable in-kind transfers.
    This worked out well for me but "your mileage may vary" as some like to say.
  • Like @Observant1 said, talk with TRP first before starting the transfer. You need to open a brokerage account first (if you don’t already have one) and have TRP help fill out the form. You still need to print out the form and mail them.

    If TRP carries the funds on their brokerage, you can do “in-kind” transfer without selling and buying on TRP end. If the fund is already “closed”, trying to buying at TRP is not possible. Thus, in-kind transfer is the way to go.

    If these are Vanguard funds and TRP carries them but on their Transaction fee platform, then you need to find the equivalent fund on TRP brokerage.

    Fidelity is most convenient for this type of brokerage-to-brokerage transfer. Everything is done securely online without having sending in the paperwork, Vanguard and TRP follow the traditional way and take several more days to complete the transfer.
  • Do you have to sell the Roth because your Vanguard holdings are unavailable at TRP?
    If so, you may want to consider exchanging your Vanguard holdings for ones which are available at TRP prior to the transfer.
    This should enable in-kind transfers of your Roth assets from Vanguard to TRP.

    Maybe, maybe not. Worst case is if one has Vanguard funds in an account on Vanguard's mutual fund platform and one wants to transfer money into a closed TRP fund.

    One cannot buy non-Vanguard funds on Vanguard's mutual fund platform. One would have to open a Vanguard brokerage account and then transfer the Vanguard funds from one Vanguard platform to the other. Then one would have to sell shares of a Vanguard fund and I suspect wait a day before buying some open TRP fund as a placeholder. Then one could do the in-kind transfer. Then on the TRP side, one would do a same day exchange from the placeholder fund into the target TRP fund.

    See also Rube Goldberg.

    Or one could fill out the TRP form indicating (a) which Vanguard funds to sell in what amounts (or to sell everything) and (b) what TRP fund(s) to buy when the cash is received by TRP. The transfer form has an option to request that Vanguard wire the money. Vanguard charges all of $10 for that unless you're a Flagship customer. Then it is free. This helps reduce time out of the market.

    BTW, TRP has an option to fill out the form "online". But their customer service tells me even if you do this that when you get to the end of the process the system is going to tell you to print out the form. Then sign it, and you may also be required to get a signature guarantee (it isn't required for transfers from Vanguard). Then send the form to TRP.
  • Thanks everyone for their comments.
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