4 Things to Know Before Rolling Over to a Vanguard IRA

Many investment companies have worked to keep the rollover process as simple as possible to attract assets, and Vanguard is no exception. To avoid delays in the rollover process, it's important to know what to expect and what information is required to complete the transaction.

The Paperwork You Need to Complete a Rollover

To get the rollover process started, you need to contact both Vanguard and your employer.

You can use Vanguard's website to initiate the rollover. If you need assistance in getting the process started, you can also contact the company's customer service by phone for help. First, you need to select what type of account you need. You can choose to purchase Vanguard mutual funds and ETFs directly from the company, or you can open a brokerage account that allows you to choose stocks and mutual funds from non-Vanguard providers. Include a recent copy of your quarterly 401(k) statement to verify your account information.

Many employers have their own rollover paperwork that you need to fill out to release the funds from your 401(k). You need to complete this and return it to your employer with the instructions that the rollover check be made out and sent directly to Vanguard.

Once you have completed all of your paperwork, the rollover typically takes around two or three weeks to complete.

Understanding Fees and Costs

Vanguard does not charge you any processing fees to complete your rollover. In most cases, your employer does not charge you any type of fee either.

Depending on how much money you are rolling over and which investments you choose, certain fees may apply. Vanguard charges a $20 annual account maintenance fee unless you meet specific minimum investment requirements or you enroll in electronic statement delivery.

Brokerage accounts may carry additional costs. Purchases of Vanguard mutual funds and ETFs come without any transaction costs, but buying shares of non-Vanguard mutual funds and products may come with fees. Additionally, purchases of individual stocks, bonds or options contracts come with their own commission schedule, which depends on the overall balance of the account.

Available Investment Choices

One of the great benefits about rolling over your retirement dollars to an individual retirement account (IRA) is the vast wealth of choices it gives you. Whereas 401(k)s are generally limited to a handful of investment options, almost any type of security or investment is available in an IRA.

When you roll over your 401(k) to a Vanguard IRA, you have access to Vanguard's lineup of well over 100 different mutual funds. If you are choosing a brokerage account for your IRA, you get access to the Vanguard family of funds as well as most other fund family products, in addition to individual stocks and bonds.

Other Considerations

Many employers now offer the Roth 401(k) option within their retirement plans. If you are interested in rolling over a Roth 401(k) to Vanguard, the process is essentially identical. You would just be moving your money into a Roth IRA instead of a traditional IRA, with no additional costs involved.

Some employers may choose to send the rollover directly to you instead of to Vanguard. If this happens, forward the check on to Vanguard. However, the money needs to arrive at Vanguard within 60 days so you can avoid any Internal Revenue Service (IRS) penalties.