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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75890  
Subject: Re: Distribution Penalty? Date: 12/11/2000 10:29 AM
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I agree with Mark.
If you do a custodian-to-custodian transfer there isn't any 10% penalty or taxes on capital gains. First you set up the IRA with Vanguard. They will send you paperwork to do the transfer. Your existing custodian may charge you an exit fee of $50 or so. Then you liquidate whatever of the existing investments you wish (or do this before the transfer, depending on whose commissions are lower). Then buy the Vanguard Index fund with the proceeds.
An IRA is a box. As long as you leave money in it there are no taxes on dividends, capital gains or anything else. At 70 1/2 you must start taking money out, and pay taxes on it.
Once at Vanguard, you can convert the same account to a Roth if you wish. If you are converting all at once, it would be just a change in account number and you pay the taxes on amount of gains converted. Or you can convert just part and leave the rest in a traditional IRA.
Best wishes, Chris
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