Avoiding fees at Vanguard

[threebeansalad]

Question for the Vanguard clients: Is the $10 Low Balance Fee on IRAs under 5K charged when the account is first opened or after a year of having the account? ...Or at the end of the calendar year ?

Here's the situtaion:

I was all set to open my first Roth IRA at Vangaurd this month (Dec 2006) and max out to 4K for 2006 (I'm going to Target Retirement Fund for now).

However, if the $10 charge is made when the account is first opened or at the end of calendar year, I wonder if I should wait a few weeks until the New Year and contributed the 4K for 2006 and another 1K for 2007, thus avoiding the $10 fee (I plan to put everything in a Target Retirement Fund for now). I have enough money to do this and still maintain an EF.

Any thoughts? I know it's only $10, so maybe I created more hassle than it's worth and I should just do the 4K now.

[sweeps]

The $10 fee is charged immediately. Wait till January 1 to make a $5,000 deposit and avoid the fee.

[hrbatyfan]

The charge the fee during December and July (or maybe June). Just wait til January 1st 2007 and make a 2006 and 2007 contribution.

[threebeansalad]

To put it simply: You guys rock. Thanks.

[sweeps]

Originally Posted by hrbatyfan

The charge the fee during December and July (or maybe June).

That could be true on an ongoing basis, but when you're first opening an account you get charged the fee immediately.

On a side note, you can pay the $10 fee separately, so you're able to deposit the full $4,000 in the IRA (and not $3,990).

[Aleta]

To be honest with you, I would call them up and ask them when their fees are paid out and how you could avod paying that fee. It might surprise you. Especially if you have another account tied to your target retirement account. For instance if you have a prime money market. My husband and I paid $15. per IRA for years. Think of how much money we paid out. They're pretty helpful and will answer your questions honestly. Alway check with the company first. Companyies change their rules all the time.

[Aleta]

By the way, I didn't get charged the fee, so find out how you can avoid it and when.

[sweeps]

Aleta, did you have more than $50,000 in total assets at Vanguard? If so, that's how you avoided the fee.

[Aleta]

That's what I'm saying about the reason she needs to call them.

[threebeansalad]

I actually called Vanguard before I posted here but I forgot to ask when the fee would be charged. I described what I was thinking of doing to avoid the $10 fee and the representative just said, said "OK!"-- which made me think I was making a good decision.

This is my very first dealing with Vanguard so I was curious if people on the message board might say something like trying to make depsots for 2006 and 2007 at the same time is a big hassle or something to that effect, but it sounds like it's not and I should just wait until after Jan 1.

I WISH I had 50K at Vangaurd! Ha! Hopefully in time!

[Aleta]

I would still call them if I were you. I remember only paying the $10. at one company at the end of a quarter and the other one was by September. I would still ask. Just come out and ask them, when will the $10. be deducted. As was said here is that you can send in the $10 if you must separate. I find Vanguard to be even helpful. I have asked their advisors about the different retirement accounts and have told them of some of my fears, and they'll talk to you about it and tell you maybe yes, that particular fear is justified. For instance if you think that you're investing too agressively, they might tell you that yes if the market would go down now or in the next number of years, that you might not be able to come back as you'd like. I've for the most part had a very possitive experience with them and I've had my account since 2000.

[hrbatyfan]

My first post is a result of calling and asking this exactly this.

[sweeps]

I believe you that a CSR told you that, but I can tell you I opened a Roth at Vanguard in September for my wife. I was required to pay the $10 fee up front to open the account.

[hrbatyfan]

That's unfortunate. Luckily waiting til January 1st remedies it.

[sweeps]

Yup. But I'm glad I didn't wait because her account has earned $337 since we opened it. Makes that $10 fee pretty insignificant.

[lrjohnson]

I opened an account in August, and was charged the $10 fee immediately also.