Opening a Vanguard SEP-IRA and Executing a Direct Rollover
Tip It!Having just moved and changed jobs, I still have a few loose ends to tie up when it comes to things like my retirement plan. At my old job, I had a 403(b) held through Vanguard, and I received a double-match on contributions up to 5% of my annual salary (so when I contribute 5%, my employer kicked in 10% for a total of 15% — nice). Since I’m a huge fan of Vanguard, I wanted to keep the money in place. However, I have no interest in keeping the money in the 403(b) — I’d really prefer to have a bit more control over those dollars.
Because I now have a decent amount of self-employment income, I decided to open a SEP-IRA and then do a direct rollover. The advantage of the SEP-IRA is that I can make ‘employer’ contributions on my own behalf that aren’t subject to the traditional/Roth IRA contribution limits (we’re already maxing our Roths for 2006).
Before I could do the rollover, however, I needed to establish an account. Fortunately, Vanguard makes this really easy to do — in fact, you can handle everything online in about five minutes. I didn’t bother funding the account, as I need to sort some things out before I’ll know exactly how much I can contribute. But they let me open the account just the same. As for the rollover, I actually had to get a special form, fill it out, sign it, have my wife sign it (and get it notarized), and then forward it to my former employer with instructions. From there, it will get redirected to Vanguard.
I have no idea how long this will all take, but hopefully it will go off without a hitch. And since I’m rolling money from one Vanguard account to another, we won’t actually be out of the market — rather, they’ll just swap things around at the end of the day (or so I’ve been told). We shall see…
Published on October 19th, 2006 - 4 Comments
Filed under: Retirement, Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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October 19th, 2006 at 10:57 am
Hi:
I also take advantage of the trustee-to-trustee transfer option in handling my employer provided retirement plan, in this instance, a SIMPLE IRA.
I detail the mechanics and motivation for such a move in my blog post:
http://financialpage.blogspot......sfers.html
regards,
Barry