Transferring my taxable brokerage account to Vanguard-conundrum :)


#1

Hey Everyone-

Looking for some advice on transferring my taxable account (currently with TD Ameritrade) to Vanguard…

My TDA account currently is about $8,000 and I’m contributing a little more than $200 a month. And 95% of my shares have been invested for more than a year.

The account consists of:

50%- VTI (Vanguard Total Stock Market ETF)
50%- spread across 5 different individual stocks

I want to transfer to Vanguard and invest in VTSMX (Vanguard Total Stock Market Index Fund Investor Shares) to be able to set up automatic bi-weekly investments (passive/lazy investing approach). Plus with my monthly contribution I’m only able to buy one share of VTI through TDA per month and this is done manually. Through Vanguard I’d be able to currently buy at least three shares a month.

Finally to where I need some advice :wink:

1.) Should I transfer all of this to Vanguard as in kind and the liquidate through Vanguard ($7 fee per stock) and purchase VTSMX?

2.) Liquidate through TDA ($6.95 fee per stock; VTI commission free) and then transfer cash to Vanguard?

3.) Leave the individual stocks in TDA and forget them for awhile? Then transfer VTI to Vanguard and liquidate and buy VTSMX?

4.) Do nothing?

I really would like to do the passive/lazy investment style through Vanguard as I do with my Roth IRA and pre-tax 403b but am still slightly torn due to the $75 TDA fee for transferring entire account and tax implications.

Really looking forward to everyone’s advice and/or experience with this!

Thanks in advance!


#2

Are you under the 15% tax bracket and are all your capital gains long term? If so you wouldn’t have any taxes.
Sometimes if you ask the receiving brokerage to pay any transfer fees they will.

Knowing these answers will change recommendations.


#3

Thanks for your feedback!

I’m in the 25% tax bracket and Vanguard won’t pay the transfer fee.

Thanks again!


#4

Worth noting the lower fees at Vanguard will likely pay back the fee in a year or two.
2% of 8000 is 160 so if TD is charge close to that you are ahead in year 1…


#5

You might already be aware of this, but once you cross the $10k threshold, which you will soon (go you!!), you can move everything into VTSAX and avail of that sweet, sweet Admiral shares expense ratio. 0.04%, happy dance!

Probably like many here, I’m all Vanguard myself and I’m delighted so far.

In terms of the individual stocks, one perspective could be, since the actual $ amounts are still modest, you could just transfer, pay the fee, and get everything over into Vanguard, nice and simple. Another way to look at it, though, is if they’ve gone up in value a lot since you bought them, is there really any point in paying capital gains on the currently very high price, only to go and buy VTSMX at its currently also quite high price? But then you get into a game of waiting for prices to fall, and as we all know, it’s a fool’s errand to try to time the market. So count me as a vote for option 1.


#6

Thank you! Yes, that is the goal to build up to VTSAX (currently have my Roth in that) :smile:

I was thinking the same thing with the individual stocks (it’s nice to see it written out instead of the debate going on in my mind :wink:. Two of the individual stocks have performed very well but a very small amount invested in each (gain of a little less than $300 on each). I’m thinking the capital gains won’t be too bad. I just need to do it.

Thanks again for your advice and feed back, much appreciated!


#7

Thanks GRuga! I agree. Very impressed with Vanguards low fees as I’m sure we all are.


#8

I’m a big advocate of keeping things as simple as possible. Sell the small individual positions and be done with it. The taxes are manageable, regardless of your tax bracket.

One question I asked myself when I contemplated selling a position was: If I didn’t own it right now, would I buy it today? If I wouldn’t, then why am I keeping it (unless there was some big issue like taxes)? This led me to sell (or donate!) all of my individual stock positions and stick to a five-fund portfolio mix that works for me. Now the only selling I do is to re-balance!

John


#9

Right on John! Do you recommend selling with my current TDA platform before the transfer or doing that with Vanguard after the transfer?


#10

RL18,

Were it me, I’d sell everything and move the cash for a couple of reasons:

  1. Transferring fewer holdings (just one in this case, cash) leads to fewer potential problems.

  2. More importantly, TDA has your cost basis info and will report it to the IRS when the shares are sold. I’m not sure the cost basis info would transfer with the shares to Vanguard. Transferring just cash eliminates this issue. Sure, you’ll pay a little tax, but you’ll get a stepped up basis so it will all work out in the end!

The costs to sell are about the same either way, so again - keep it simple - and close out the holdings at TDA and then transfer the cash. In fact, depending on how you have the account set up, you may be able to write a check off of the TDA account and deposit it in Vanguard. Check with TDA to see if that is possible. Much easier than transferring shares.

John


#11

Thank you, great advice! I appreciate the view of cost basis (wasn’t even on my radar), makes great sense to do it this way.

I will definitely check with TDA in regards to writing a check from the account (that’s good thinking!).

Greatly appreciate the advice.


#12

Happy to help! Good luck.

John


#13

TD Ameritrade has a FREE Partial Transfer option. Could you work out some partial transfer arrangement, leaving behind a small amount of one of the Stock Shares? Be mindful of any account minimum TD might have and the FREE Partial Transfer might allow you to transfer to Vanguard for no additional costs


#14

I wanted to give everyone an update:

I sold all shares in my TDA and then transferred my account to my bank account and then transferred into Vanguard from my bank account. Avoiding the $75 fee. There’s probably other ways of doing this but this worked for me.

Thanks again everyone! Much appreciated!


#15

I suspect you may have done this the most efficient way in regards to fee + taxes. I’m thinking about doing something similar. Thanks for the update. :wink: