The following is a guest post from my brother, Nik. I have been hounding him to rollover his various 401(k) accounts from previous employers into a single IRA for over 5 years. He finally moved one account to Vanguard this year and the following is his experience.
My Experience Rolling over to Vanguard
Like many, I have been with several employers since I finished school and started in the workforce. And because I have always been pretty good about contributing to my retirement accounts, at one point I had a Roth IRA, two 401k’s, a 457b and my own individual stock account. Trying to manage so many accounts was daunting, so I ended up doing what a lot of us do – ignoring them and just letting things sit. While this isn’t terrible (I figured at least I had some retirement funds gaining money) it goes against the idea of rebalancing and diversifying your portfolio. So, after reading my brother’s blog for the last year, I was finally motivated to try to consolidate the accounts so I could take a (slightly) more active role in managing my portfolio.
I chose Vanguard basically because I had heard a lot of good things about their no/low load funds and good performance. I started by calling the number on their Personal Investors website, quickly got through to a live person and explained that I wanted to rollover my IRA from a former employer to Vanguard. I was transferred to a “concierge” transfer specialist who then walked me through the process of creating an account online, which took about 5 minutes. He also verified that I wanted to do a rollover IRA and asked what type of investments I wanted to place the money in once it reached Vanguard. I opted for a money market holding fund until I could do more research on their offerings.
Then he asked for the contact number for my former employer’s IRA people and I was placed on hold while he contacted them to explain the situation. After a few minutes, the Vanguard agent came back on the line with the other agent conferenced in and we quickly verified my identity and intent. The Vanguard agent was also good enough to ask questions that I didn’t think of, such as what papers I needed to sign and where to send them when I was done.
After hanging up, I received an email confirming creation of my Vanguard account as well as a couple of documents to sign, which I sent back right away. A week later I got a packet in the mail from my former employer, so I filled that out and sent it in and a few days after that an email confirmed that my funds had been transferred over. All in all, it was a very easy process and Vanguard was very helpful in expediting what could be a confusing process (though I suppose when you’re giving someone money, it makes sense for them to make it as easy as possible for you.)
As for the details of the account itself… My account is a Rollover IRA account and allows me to trade for any of Vanguard’s mutual funds (they have about 100 of them) without a transaction fee, though some of them have a time limit redemption fee (1% if redeemed in < 1 year, etc.) They do not allow trading in specific stocks, ETF’s unless you have a “brokerage” account. You can open a brokerage acct under the umbrella of your IRA acct and that costs $20/year and there is a transaction fee for trades ($7 per trade for the first 20 trades in a calendar year then $20 per trade thereafter). If you have more than $50,000 combined in your Vanguard holdings, you are considered a “Voyager” member then the $20 fee is waived and the transaction fee becomes $7 for all trades.
At the moment, I’ve decided to split up my IRA into health care, emerging markets and energy mutual funds to balance out my portfolio in my other accounts. I still have a couple of other 401k’s that could be transferred but want to wait a bit and see how my experience at Vanguard goes before doing that. Hopefully, this will help me consolidate my portfolio a bit and allow me to manage things more appropriately. I’ll write back and let you all know how it goes!
retirebyforty> Thanks for sharing your experience! I’m glad you did it. I would rollover my 401(k) as soon as I can when I leave a job. That way you can have full control of your money. Companies change their 401(k) plans occasionally and if you don’t pay close attention, you won’t know what they are doing with your money.
There is a great new website to help you manage your investments – Personal Capital. You can keep track of your income, expenses, and investments, all in one place. Personal Capital is geared for investors and have many great tools. See my review of Personal Capital and how they helped me reduce what I’m paying in investment fees.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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