I want to transfer my Roth IRA mutual fund to a brokerage account. If the fund has to be liquidated in order to move the assets, will I be paying tax on this money twice?

No, you won't even pay tax once. Transfering from a fund company to a brokerage firm is not a taxable event, as long as it goes into a Roth at the brokerage firm. You can sell the fund and move all of the proceeds or you can move the mutual fund itself. What firm are you thinking of moving it to?

Into an Ameritrade brokerage account.

I'm currently looking for another broker. I have gotten nothing but bad service from Scottrade. Please let us know how you like Ameritrade, after you have been there a while.

No, you won't even pay tax once. Transfering from a fund company to a brokerage firm is not a taxable event, as long as it goes into a Roth at the brokerage firm. You can sell the fund and move all of the proceeds or you can move the mutual fund itself. What firm are you thinking of moving it to?

Technically the OP did pay tax on at least the contributions in the year the contribution was made...

I'm currently looking for another broker. I have gotten nothing but bad service from Scottrade. Please let us know how you like Ameritrade, after you have been there a while.

Funny, I left Ameritrade for Scottrade because I have had bad service at the former and great service at the latter.

Fuskie
Who would roll over his 401k there if he were still planning to roll over his 401k...

Fuskie,

Are you leaving your 401(k) at your company?

JLP

I transferred my Roth from Scottrade to Vanguard because of Scottrade's new Vanguard transaction fees and because those are the only funds I use. Scottrade made me liquidate my funds before transferring them to Vanguard. I had four funds, resulting in a $68 (17*4) fee to Scottrade. Should I have been required to do that?

I transferred my Roth from Scottrade to Vanguard because of Scottrade's new Vanguard transaction fees and because those are the only funds I use. Scottrade made me liquidate my funds before transferring them to Vanguard. I had four funds, resulting in a $68 (17*4) fee to Scottrade. Should I have been required to do that?

I don't see why. You're just changing the custodian of the Roth, that's all. Vanguard is now becoming the custodian. They are going to be the ones holding the Roth account.

The more I think about this, the stranger it gets. Did Scottrade send the cash proceeds from the sale of the funds to Vanguard? Did the funds then have to be re-purchased?

You're right to refer to this as a transfer. But I think the funds themselves should have been transferred, not cash. (And the cash was certainly not a contribution, right?)

Funny thing ... I've always had my Roth at Vanguard and I used to wish that I had it at Scottrade because Vanguard charged for the low balance in my Roth; they also had an additional fee for the low balance in a fund (I only had one fund, VFINX). So I got hit with two low balance fees until the account got sufficiently large. I can't remember exactly how the rules work, but it seems to me that if your four funds are sufficiently small, Vanguard may hit you with four low-balance fees--and then, if the overall Roth is too small, there's another fee on top of that.

--SirTas

That's what I thought. But, a rep from the local Scottrade office gave me a call after I initiated the transfer through Vanguard's web site. He said the only way to transfer was to liquidate my funds and instructed me what to click to complete the process. I do not know if Scottrade sent the cash to Vanguard or how my money got to Vanguard. All the cash from the account appeared in my Vanguard account a few days later, which I put into one fund.

The low-balance Vanguard fees are a nuisance, but the new $17 transaction fee through Scottrade would be even more of a nuisance. Right now, my money is in one fund until I meet the minimum account fee to get rid of one of the two $10 annual fees. Vanguard makes dollar-cost averaging much simpler, and I feel more comfortable with Vanguard.

The low-balance Vanguard fees are a nuisance, but the new $17 transaction fee through Scottrade would be even more of a nuisance. Right now, my money is in one fund until I meet the minimum account fee to get rid of one of the two $10 annual fees. Vanguard makes dollar-cost averaging much simpler, and I feel more comfortable with Vanguard.
----------------

Another plus associated with your move to Vanguard is that you will eventually invest enough in your account so that you will not have to pay the low-balance fee. If you stayed with ScotTrade, you would have to always pay the transaction fee every time you wanted to add to your Vanguard Fund. So - at least there is a light at the end of the tunnel.

In case you haven't seen it yet, this link explains Vanguard's fees:

http://tinyurl.com/5ad2t

Regards,
Bill (A happy Vanguard member)

For some reason, the "TINY URL" in my last post on this thread didn't do it's job, so I'll try it again using Vanguard's URL. This is a link to Vanguard's fees:

http://flagship2.vanguard.com/VGApp/hnw/VanguardViewsArticle?ArticleJSP=/freshness/News_and_Views/news_ALL_fundfee_04302004_ALL.jsp#b


Rgards,
Bill