scottrade vs. vanguard

tinapbeana · #1 (**permalink**) 10-22-2006, 06:59 AM

morning all, tina here with an opinion question for any & everyone.

i have about 7k in a 401k from my last job. it's with ML, who I liked fine, but since i don't have the job any more it's harder for me to access the account to manage it. i want to roll the balance into an IRA and convert it to a Roth IRA at the beginning of the year. i've already spoken with our accountant who feels the tax liability won't be an issue when compared to the interest that's being paid on the house and our current witholding levels.

so, i'm trying to pick a place to roll it. right now, i'm interested in vanguard and scottrade. VG b/c i've read several complimentary posts here about them

ST b/c they have a $500 min balance, no acct maintenance fees, and most importantly a branch office less than 2 miles from my house. the thoughts of having a branch local make me feel all warm & fuzzy inside.

at any rate, i wanted to toss this idea out into the ether, to see if anyone had experience regarding VG vs. ST. any input is much appreciated!

sweeps · #2 (**permalink**) 10-22-2006, 07:43 AM

If you're going to be doing a lot of trading -- and especially if you want to invest in funds outside of Vanguard -- go with Scottrade. If you're a passive index-fund investor, go with Vanguard.

tinapbeana · #3 (**permalink**) 10-22-2006, 07:50 AM

Quote:

Originally Posted by Sweepsplayer

If you're going to be doing a lot of trading -- and especially if you want to invest in funds outside of Vanguard -- go with Scottrade. If you're a passive index-fund investor, go with Vanguard.

i don't necessarily do a lot of trading, but i do eagle eye my portfolio and redistribute every 3-6 months if i feel it's appropriate (12-18% returns show this is working so far!).

ironically, one of the perks of scottrade is that they also offer vanguard. how funny!

meaghanchan · #4 (**permalink**) 10-22-2006, 09:10 AM

Vanguard's brokerage arm is pretty expensive as far as brokerages go. If you're buying either a lot of single stocks, ETFs, or funds from non-Vanguard families, I would go with Scotttrade.

If you want to buy just Vanguard funds, no other funds, no ETFs, I would go with Vanguard.

(disclaimer: I have money invested with Vanguard. I have no money invested w/ Scotttrade.)

safari · #5 (**permalink**) 10-22-2006, 02:18 PM

I agree with meaghanchan. If you only want to invest in Vanguard funds, then go with Vanguard; otherwise, go with Scottrade.

Ima saver · #6 (**permalink**) 10-22-2006, 02:54 PM

I like vanguard and have my IRA's there, but I don't know anything about scottrade!

poundwise · #7 (**permalink**) 10-22-2006, 03:11 PM

You may also want to consider TradeKing. They have been mentioned on this forum by others a couple of times and I have subsequently looked into them myself. I do not currently trade, as I am attacking debt, however, from what I could ascertain, they may be worth a look. Search the forum - they were offering a $100 bonus at one time.

poundwise · #8 (**permalink**) 10-22-2006, 04:15 PM

Tina,

You may want to also consider TradeKing. Sweepsplayer posted about them a couple of months ago. They have lower commissions than Scottrade and are presently offering a $100 bonus. link

Just FYI.

tinapbeana · #9 (**permalink**) 10-22-2006, 04:31 PM

Quote:

Originally Posted by poundwise

Tina,

You may want to also consider TradeKing. Sweepsplayer posted about them a couple of months ago. They have lower commissions than Scottrade and are presently offering a $100 bonus. link

Just FYI.

actually, i already have a tradeking account for 'playing' with my $100 worth of stocks. scottrade, though, specifically offers a roth IRA, and these are 401k funds i'm looking roll.

poundwise · #10 (**permalink**) 10-22-2006, 05:37 PM

Quote:

Originally Posted by tinapbeana

actually, i already have a tradeking account for 'playing' with my $100 worth of stocks. scottrade, though, specifically offers a roth IRA, and these are 401k funds i'm looking roll.

TradeKing also offers a Roth IRA account.

meaghanchan · #11 (**permalink**) 10-22-2006, 05:37 PM

Tina,

I'm sure you are aware of this but just want to clarify: You are not able to roll a 401(k) into a Roth IRA. You can roll it over into a regular IRA.

Though I am not sure on this point, as I don't have accounts with any brokerages- I thought all brokerages offered the ability to classify your investments as IRA investments. Am I wrong?

poundwise · #12 (**permalink**) 10-22-2006, 05:41 PM

Quote:

Originally Posted by meaghanchan

Tina,

I'm sure you are aware of this but just want to clarify: You are not able to roll a 401(k) into a Roth IRA. You can roll it over into a regular IRA.

Though I am not sure on this point, as I don't have accounts with any brokerages- I thought all brokerages offered the ability to classify your investments as IRA investments. Am I wrong?

She will be able to do it but it will take an extra step.

"A Roth IRA conversion is a two-step process. You cannot rollover your 401(k) funds directly to a Roth IRA. First, you must do a Rollover IRA. After that, you can transfer your Rollover IRA funds, called a conversion, to a Roth IRA. Caution: You must pay taxes on any money that goes into a Roth IRA." -- from InvestSafe.com

Also, I don't know if it is true of all, however, TradeKing certainly allows both standard and Roth IRA accounts.

poundwise · #13 (**permalink**) 10-22-2006, 06:15 PM

Quote:

Originally Posted by meaghanchan

Tina,

I'm sure you are aware of this but just want to clarify: You are not able to roll a 401(k) into a Roth IRA. You can roll it over into a regular IRA.

Though I am not sure on this point, as I don't have accounts with any brokerages- I thought all brokerages offered the ability to classify your investments as IRA investments. Am I wrong?

She will be able to do it but it will take an extra step.

"A Roth IRA conversion is a two-step process. You cannot rollover your 401(k) funds directly to a Roth IRA. First, you must do a Rollover IRA. After that, you can transfer your Rollover IRA funds, called a conversion, to a Roth IRA. Caution: You must pay taxes on any money that goes into a Roth IRA."

Source: InvestSafe.com

Also, I don't know if it is true of all, however, TradeKing certainly allows both standard and Roth IRA accounts.

sweeps · #14 (**permalink**) 10-22-2006, 07:17 PM

Just FYI, beginning in 2008 the 2-step conversion will no longer be necessary, thanks to the Pension Protection Act of 2006.

tinapbeana · #15 (**permalink**) 10-22-2006, 08:51 PM

Quote:

Originally Posted by poundwise

Also, I don't know if it is true of all, however, TradeKing certainly allows both standard and Roth IRA accounts.

thanks, price: i didn't know tradeking had ira accounts as well.

for those who asked, the strategy is to roll from my 401k->traditional ira -> roth ira starting january 2007 so the money i will have to pay in taxes on the conversion will have the full calendar year to earn 5.25% in savings. i want to have a roth because of the tax-free earnings, and also b/c i can withdraw my contributions without penalty should need arise. this will alow me to keep more of my EF money in the retirement kitty earning (hopefully!) better than 5.25%

i've had the 401k with merill lynch for 4 yrs and have liked their service, it's just harder to maintain the account since i'm at a new job, and the money isn't as liquid. also, said new job doesn't offer a 401k; if they did i'd just roll into theirs.

Homebody · #16 (**permalink**) 10-22-2006, 09:21 PM

My DH and I have our IRA's at Scottrade and I like them very much. We do not live near a branch, but every time I have called with a question, they pull me up on their computer very quickly and I have a common name!

I started out with traditional IRA, DH with a Roth. I transferred in my Dean Witter funds and then roled it all into a Roth IRA.

I do own a Vanguard Fund in my Scottrade IRA. I do own individual stocks as well as a couple of different mutual funds.

poundwise · #17 (**permalink**) 10-22-2006, 09:23 PM

Quote:

Originally Posted by Sweepsplayer

Just FYI, beginning in 2008 the 2-step conversion will no longer be necessary, thanks to the Pension Protection Act of 2006.

Sweeps,

Will this change result in any tax savings? Or will it just be a simplified process?

tinapbeana · #18 (**permalink**) 10-22-2006, 09:25 PM

homebody, do you mind if i pick your brain a bit? if so, i have a few questions.

how long have you had your accounts w/ scottrade? have you withdrawn any contributions to the roth, and if so was the process quick & painless (so to speak)? also, since you did the traditional -> roth rollover, did they process your paperwork properly so the feds didn't 'accidentally' think you'd had a disbursement? i ask this b/c it's something my accountant recommended i keep an eye on no matter where i take the funds.

sweeps · #19 (**permalink**) 10-23-2006, 05:08 AM

Quote:

Originally Posted by poundwise

Sweeps,

Will this change result in any tax savings? Or will it just be a simplified process?

My understanding is that it's just a matter of convenience. No change in taxation.

Diolla · #20 (**permalink**) 10-23-2006, 07:55 AM

Quote:

Originally Posted by tinapbeana

also, said new job doesn't offer a 401k; if they did i'd just roll into theirs.

You wouldn't want to do that even if you could. Company 401(k) plans don't give you the investment choices you can get with a regular IRA. I have read to always roll over 401(k) plans into traditional IRA's whenever the opportunity presents itself as then you have the whole world of investments to work with.