With its extensive collection of cost-effective index mutual funds and ETFs, Vanguard has secured its position as one of the global investment giants. A top choice for investors aiming to switch their 401(k) retirement savings to an individual retirement account (IRA), Vanguard simplifies this rollover process.
To kick off the rollover, it's crucial to touch base with both Vanguard and your employer. Vanguard's website provides the necessary tools to launch the IRA rollover. You'll need to determine the type of account required for your IRA. Vanguard offers its own mutual funds and ETFs along with an option to set up a brokerage account giving you access to funds, stocks, bonds, and CDs from non-Vanguard providers as well. Remember to attach the latest copy of your quarterly 401(k) statement to verify your account data.
To release your 401(k) funds, employers may need you to fill out specific rollover forms. Complete these and revert to your employer with the directive for the rollover check to be sent straight to Vanguard. Once all paperwork is done, it usually takes between two to four weeks for the rollover to be finalized.
Completing your rollover on Vanguard doesn't come with any processing charges and in most instances, employers also don't levy any fees. However, make sure to appoint beneficiaries for your account after rolling over your 401(k) into an IRA. Depending on the amount being rolled over and the investment choices, you might come across some fees. Vanguard imposes a $25 annual fee for account upkeep unless you opt for online services or e-statements.
When choosing to buy non-Vanguard mutual funds and products, transaction costs may apply. Also, purchases of individual stocks, bonds, or options contracts have their own commission plan, relative to the account balance.
The decision to roll your retirement savings into an IRA gives you a world of investment opportunities, unlike 401(k)s which offer limited options. With a Vanguard IRA, you have access to hundreds of Vanguard's index mutual funds and ETFs.
In some cases, employers might send the rollover to you instead of Vanguard, termed as an indirect rollover. In such instances, forward the check to Vanguard promptly to avoid IRS penalties. The good news for those interested in rolling over a Roth 401(k) to Vanguard, the procedure is essentially the same, minus any additional costs.
Before deciding to switch your 401(k) to a Vanguard IRA, take time to understand what to anticipate, the fees involved, the regulations, and the information needed by your former employer and Vanguard to facilitate the transaction.