Thread: USAA to Vanguard IRA Transfer

Congrats getting your post in amongst all the * stuff. Usual weekend posts about nothing new.

I think so. This may help. IRS.gov 404 Error Page. Oops. The pub referenced on IRS.gov does not exist. So much for that.

A Roth is a Roth. You paid your taxes. I am no expert and perhaps someone else will reply.

PO

Originally Posted by PessOptimist

Congrats getting your post in amongst all the * stuff. Usual weekend posts about nothing new.

I think so. This may help. IRS.gov 404 Error Page. Oops. The pub referenced on IRS.gov does not exist. So much for that.

A Roth is a Roth. You paid your taxes. I am no expert and perhaps someone else will reply.

PO

www.irs.gov/publications/p590a/
... to Roth IRAs from other retirement plans. Trustee-to-Trustee Transfer; Rollovers;
Transfers Incident To Divorce; Converting From Any Traditional IRA ...
This might be a better IRS link....'404 Error' pages are not usually very helpful.

Just make sure you do a Trustee to Trustee TRANSFER. Don't do a distribution and re-invest. When I transferred to Vanguard, there were NO FEES from either Trustee. And Vanguard does let you open a Roth with less than $3K, I opened one for $1K for my daughter...Star Fund. Different funds have different minimums ($25K for Precious Metals Fund), and they all have different required holding periods...just have to check the fund requirements.

It was easy to do, just notify each of them ahead of time, and they will do all the work. It DOES take some time, so allow for that. They will send you the necessary forms.

Good Luck!

Originally Posted by maui21ice

I currently have a Roth IRA with USAA and it has done ok so far getting me about 7% in 2014 and so far about 4-5% here in 2015.

Now I only have had the account for just under 2 years and only have about $2,000 in it, but I really want to put my $$ in an IRA that will give me a better percentage of gains each year. Preferably over 10%. I'm still young (29) and want to be aggressive, but also find a fun that has avoided huge losses in down years.

I guess my questions are:

Do you know if it will be heavy fees for transferring from one Roth IRA to another like that?
Is it smart to do this transfer?

I will wait until I have over $3000 before I start the process because I know that's the lowest minimum deposit I need at Vanguard.

Maui,

I commend you for thinking about this stuff, and planning ahead, at your age !!! Remember...."Compounding Interest/Dividend Reinvestment is your Friend !" You'll be in fine shape when you retire !!!

To answer your questions : As others noted, there should be no cost to transfer, unless there's some obscure clause in your IRA agreement...I doubt USAA would do that, though...just be sure to do a trustee-to-trustee direct rollover...let them handle it...DON'T touch the money yourself ! The Companies should walk you through the process...lot's of paperwork, but "doable" !

I AM curious to know...you currently have a USAA Roth IRA...I know nothing about Roth IRA's, but I rolled most of my TSP over into a self-directed Traditional IRA with USAA. Are you limited to what you can do with your money in your USAA Roth ? Besides the current better return, what advantages do you see with Vanguard ? In my IRA, I can buy all kinds of stocks and funds...yes, I can buy the USAA mutual funds at no transaction cost, but I can buy Vanguard funds, T Rowe Price, PIMCO, etc etc. In the Big Picture, I feel the transaction costs are chump change, unless you're a short term trader... Right now, I'm holding Vanguard VXF, T Rowe Price PRULX, PIMCO PONDX and PCKDX, and various USAA Funds...

Just wondering....


Stoplight...

Originally Posted by maui21ice

I guess my questions are:

Do you know if it will be heavy fees for transferring from one Roth IRA to another like that?

Is it smart to do this transfer?

I will wait until I have over $3000 before I start the process because I know that's the lowest minimum deposit I need at Vanguard.

1) Vanguard IMHO is THE BEST because of their industry leading LOW FEES, which they claim are 82% less than the industry avg!

So, you'll want to take FULL advantage of finding funds with LOW FEES.

When you hit $10k - you can move into the EVEN LOWER FEE funds called ADMIRAL FUNDS (free to transfer to other Vanguard funds).

Some of our ROTH IRA's Admiral fund FEES are as low as .05% & that is as LOW as it gets! Lower the fees = KEEP MORE of your own MONEY. For example, the Total Stock Market (Admiral) Index Fund (VTSAX) is only .05% fees (I believe sometimes called expense ratios). .05% can save you tens of thousands of dollars over the long run.

Even a fund that is 0.18% can save you a lot of money. For example, the industry avg is 1.02% when compared to Vanguard's 0.18% expense ratio. A $10k investment earning a 6% avg over 30 years will save you $12,185 in stupid fees. That same scenario means that $50k over 30 years = $60,926 savings; $100k over 30 years = $121,851 in savings.

2) Vanguard didn't charge any fees to transfer from Franklin Templeton or Investco - our other high fee brokerage (both were robbing us blind in fees that we weren't even aware of - including the sneaky 12b-1 "marketing" fees). We were paying something like 1.20% in fees & didn't even have a clue that we were being fleeced. Also be wary of funds that have a buy in fee. You want to look for funds with "no load" or "purchase" fees. No load = no fee to "buy in" to the fund. Be wary of redemption fees that some charge - typically if you sell in a short time. Vanguard has very few funds with any kind of purchase or redemption fees.

3) Vanguard will be able to tell you if USAA charges a fee (I doubt they would charge you) to move your money to Vanguard. Let Vanguard handle the transfer.

4) No need to wait. Vanguard has several target date funds to choose from that only require $1,000 minimum & once you hit $3k you can do free xfer to a different fund, & also once you get to $10k - don't forget about the Admiral funds (which are typically the same as the $1k to $3k investor funds, just with lower fees).

Since you have about 30 years, you might consider (VTIVX) - the 2045 Target date retirement fund (just to get started). It has a 0.18% fee & only requires a minimum of $1k. YTD = 4.66% & 2003 inception is avg of 8.08%. Not too shabby. It's about 90% stocks & 10% bonds. 59% is in the Total Stock Market Index Fund; 30.9% in the Total International Index Fund; 7.5% in the Total Bond Market II Index Fund; & 2.6% in the Total International Bond Index Fund.

Originally Posted by Stoplight

To answer your questions : As others noted, there should be no cost to transfer, unless there's some obscure clause in your IRA agreement...I doubt USAA would do that, though...just be sure to do a trustee-to-trustee direct rollover...let them handle it...DON'T touch the money yourself ! The Companies should walk you through the process...lot's of paperwork, but "doable" !

I AM curious to know...you currently have a USAA Roth IRA...I know nothing about Roth IRA's, but I rolled most of my TSP over into a self-directed Traditional IRA with USAA. Are you limited to what you can do with your money in your USAA Roth ? Besides the current better return, what advantages do you see with Vanguard ? In my IRA, I can buy all kinds of stocks and funds...yes, I can buy the USAA mutual funds at no transaction cost, but I can buy Vanguard funds, T Rowe Price, PIMCO, etc etc. In the Big Picture, I feel the transaction costs are chump change, unless you're a short term trader... Right now, I'm holding Vanguard VXF, T Rowe Price PRULX, PIMCO PONDX and PCKDX, and various USAA Funds...

Thank you, I had never heard of a trustee to trustee transfer before, I'll look into that if I di the move. Currently I'm only in the Cornerstone Aggressive fund right now but would like to possibly start purchasing Growth and income shares, a small percentage of international, and just strictly a Growth fund alongside the aggressive one. I want to diversify it a bit instead of just throwing my $5,500 into one fund year after year, but still looking into those fund options. (which USAA has all 4 of)

I am using a Roth since my TSP is Traditional at work. This way I'm just putting my own money into the IRA, and when I'm taking it out down the road at age 60ish or 70, I will have to pay a grand total of $0 taxes. If I have $800,000 in my Roth account the day I want to withdraw it, I get all $800,000, not a cent less.

Basically the Vanguard move is for a better annual yield and the more options. I see they are kind of pricier in cost per share as opposed to USAA's, so still debating.

Originally Posted by coastalite

1) Vanguard IMHO is THE BEST because of their industry leading LOW FEES, which they claim are 82% less than the industry avg!

So, you'll want to take FULL advantage of finding funds with LOW FEES.

When you hit $10k - you can move into the EVEN LOWER FEE funds called ADMIRAL FUNDS (free to transfer to other Vanguard funds).

Some of our ROTH IRA's Admiral fund FEES are as low as .05% & that is as LOW as it gets! Lower the fees = KEEP MORE of your own MONEY. For example, the Total Stock Market (Admiral) Index Fund (VTSAX) is only .05% fees (I believe sometimes called expense ratios). .05% can save you tens of thousands of dollars over the long run.

Even a fund that is 0.18% can save you a lot of money. For example, the industry avg is 1.02% when compared to Vanguard's 0.18% expense ratio. A $10k investment earning a 6% avg over 30 years will save you $12,185 in stupid fees. That same scenario means that $50k over 30 years = $60,926 savings; $100k over 30 years = $121,851 in savings.

2) Vanguard didn't charge any fees to transfer from Franklin Templeton or Investco - our other high fee brokerage (both were robbing us blind in fees that we weren't even aware of - including the sneaky 12b-1 "marketing" fees). We were paying something like 1.20% in fees & didn't even have a clue that we were being fleeced. Also be wary of funds that have a buy in fee. You want to look for funds with "no load" or "purchase" fees. No load = no fee to "buy in" to the fund. Be wary of redemption fees that some charge - typically if you sell in a short time. Vanguard has very few funds with any kind of purchase or redemption fees.

3) Vanguard will be able to tell you if USAA charges a fee (I doubt they would charge you) to move your money to Vanguard. Let Vanguard handle the transfer.

4) No need to wait. Vanguard has several target date funds to choose from that only require $1,000 minimum & once you hit $3k you can do free xfer to a different fund, & also once you get to $10k - don't forget about the Admiral funds (which are typically the same as the $1k to $3k investor funds, just with lower fees).

Since you have about 30 years, you might consider (VTIVX) - the 2045 Target date retirement fund (just to get started). It has a 0.18% fee & only requires a minimum of $1k. YTD = 4.66% & 2003 inception is avg of 8.08%. Not too shabby. It's about 90% stocks & 10% bonds. 59% is in the Total Stock Market Index Fund; 30.9% in the Total International Index Fund; 7.5% in the Total Bond Market II Index Fund; & 2.6% in the Total International Bond Index Fund.

I think USAA has extremely low fees to, which is why I'm very hesitant to part from a good thing right now. Do the Admiral funds return more gains as well, or is that mainly just a fee discount luxury? (And the free to transfer to other Vanguard funds part)

I thought about the Target date idea as well, and am trying to see in order of priority which would benefit me more, choosing a target retirement date fund, or like I mentioned at the top of the post to Stoplight, going with the Growth, Aggressive, International, and Growth & Income diversification.

Thank you big time for your advice and input. I knew very little about what both of you had posted in reply.

PO and usc, thank you for the link.

Originally Posted by uscfanhawaii

www.irs.gov/publications/p590a/
... to Roth IRAs from other retirement plans. Trustee-to-Trustee Transfer; Rollovers;
Transfers Incident To Divorce; Converting From Any Traditional IRA ...
This might be a better IRS link....'404 Error' pages are not usually very helpful.

Just make sure you do a Trustee to Trustee TRANSFER. Don't do a distribution and re-invest. When I transferred to Vanguard, there were NO FEES from either Trustee. And Vanguard does let you open a Roth with less than $3K, I opened one for $1K for my daughter...Star Fund. Different funds have different minimums ($25K for Precious Metals Fund), and they all have different required holding periods...just have to check the fund requirements.

It was easy to do, just notify each of them ahead of time, and they will do all the work. It DOES take some time, so allow for that. They will send you the necessary forms.

Good Luck!