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Moving brokerage account from Betterment to Vanguard

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  • Avatar agr285 
    Participant
    Status: Physician
    Posts: 2
    Joined: 06/25/2019

    Several years ago, I opened a brokerage account with Betterment.  Management fee is 0.2% of assets on top of the fees for the individual funds/ETFs that the money is invested in.  I put in about $200k and current value is $236k.  I also have a SEP IRA at Vanguard which I max out every year.  At this point, I feel like I can manage my own money and just invest in admiral shares of individual funds at vanguard.  My question is do I transfer the money from Betterment to Vanguard and pay the long term capital gains tax OR do I just leave it at Betterment and start a new brokerage account.  My understanding is that I can’t selectively choose which funds in my Betterment account to liquidate (i.e. sell out of the funds that don’t have much gains, that won’t trigger a tax bill, and only move that money to Vanguard).  In regards to the capital gains tax, my income this year will be $300k.

    #225098 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8134
    Joined: 01/09/2016

    I have no opinion about whether you can manage your money better at Vanguard or should pay the taxes, but do wonder why you have a SEP. No backdoor Roth interest?

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #225130 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2381
    Joined: 03/01/2018

    You can transfer the ETF shares in kind to Vanguard or another brokerage. Then you could selectively liquidate as you like. You would pay some trade fees. But beats paying unnecessary tax.

    Certainly there are some good index funds you already hold that you could fit into your desired portfolio. You could liquidate any that have losses or low LTCG.

    You can only transfer whole shares. Fractional shares will automatically liquidate with the transfer.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #225141 Reply
    Liked by Peds, jz
    Avatar agr285 
    Participant
    Status: Physician
    Posts: 2
    Joined: 06/25/2019

    To answer your question, when I first started my retirement account, I wasn’t aware of advantage of having solo 401k to allow for backdoor roth so I went with the SEP.  I am actually going to rolling over my SEP into a solo 401k at end of year so that I can start funding a back door roth.

    #225837 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8134
    Joined: 01/09/2016

    To answer your question, when I first started my retirement account, I wasn’t aware of advantage of having solo 401k to allow for backdoor roth so I went with the SEP.  I am actually going to rolling over my SEP into a solo 401k at end of year so that I can start funding a back door roth.

    Click to expand…

    Great – that is the correct answer!

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #225939 Reply

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