Vanguard IRA Review
Vanguard Roth IRA, Traditional IRA, Rollover, SEP, Simple IRA (individual retirement accounts) review, promotion offer, rating, fees and commissions. Is Vanguard IRA good and safe way to invest?
|Stocks and ETFs|| $7 for the first 25 trades, $20 for subsequent trades for account with less than $50,000 invested in Vanguard products|
|$7 for account with $50,000–$500,000 invested in Vanguard products (Voyager Services)|
|$2 for account with $500,000–$1,000,000 invested in Vanguard products (Voyager Select Services)|
|Free for first 25 trades, $2 for subsequent trades for account with $1,000,000-$10,000,000 (Flagship Services)|
|Free for first 500 trades, $2 for subsequent trades for account with $10,000,000+ (Flagship Select Services)|
|Options|| $20 + $1 per contract (Voyager: $7 + $1 per contract; Voyager Select and Flagship: $2 + $1 per contract)|
|Mutual funds|| Vanguard mutual funds - free. All others: Standard - $35; Voyager and Voyager Select - $20; Flagship - $8|
|Certificates of deposit (CDs)|| Purchase - $5 per $1,000, minimum is $50. Sale - $35 per transaction|
|Commercial paper|| $50 per transaction; minimum purchase is $100,000|
|U.S. Treasury|| Commission-free|
|Mortgage-backed securities|| $50 per transaction; GNMA minimum purchase is $25,000|
- Roth IRA
- Traditional IRA
- SIMPLE IRA
- 403(b)(7) Plan
- Individual 401(k)
- Vanguard(R) Retirement Investment Program
Vanguard IRA Fees
- IRA set-up fee: $0
- Annual IRA fee: $0
- IRA termination fee: $0
- $20 annual fee applies to each Vanguard fund with a balance of less than $10,000 (if not signed up for electronic statements)
- $25 SIMPLE IRA annual service fee for each Vanguard fund in an account. This fee is waived if you are a Voyager, Voyager Select, or Flagship client
- $15 403(b)(7) annual service fee for each Vanguard fund in the plan
- $20 Individual 401(k)/Individual Roth 401(k) plans annual fee for each Vanguard fund in an Individual 401(k) account
- $20 529 Plan annual fee if your 529 account balance falls below $3,000. This fee cannot be waived
Vanguard IRA Review: Introduction
Besides regular brokerage accounts, Vanguard also offers a selection of IRA's. Retirement savers can open an Individual Retirement Account with the broker without depositing a dime. Let's take a look at the details of the firm's retirement offerings and see how they compare to some of the company's rivals.
Opening an IRA
Several different IRA versions are available at Vanguard. The broker offers Roth, Traditional, Rollover, Custodial, SIMPLE, and SEP versions. An on-line application form is available for all of these accounts except the SIMPLE version, which must be submitted the old fashioned way. The Rollover electronic application will lead you step-by-step through the process of moving an old employer's plan into a Vanguard IRA. If you have any questions during the application process, the broker has retirement specialists who can be reached at 1‑800‑551‑8631 during the week.
IRA Fees and Account Requirements
As already mentioned, Vanguard does not require any deposit of funds to open an IRA. There is no fee to establish a retirement account; and the broker does not charge a fee for inactivity. Vanguard also does not charge anything to close an IRA. This policy is really nice, given that many brokers nowadays do charge an IRA closeout fee. For example, Fidelity charges $50, Firstrade clients pay $50 (excluding SIMPLE accounts, which have an annual fee of $25), and Merrill Edge traders are charged $49.95.
Vanguard does charge a $20 yearly fee for both regular and retirement accounts. Another $20 fee is assessed if a Vanguard mutual fund has a balance under $10,000. The good news is that both of these charges can be avoided by enrolling in electronic delivery of account documents. The broker also waives the fees for IRA's with balances above $50,000.
A $25 fee is assessed annually for each SIMPLE IRA that has a Vanguard fund in it. The charge is applied to each Vanguard fund, so if one SIMPLE account had 5 Vanguard funds, it would be charged $125 per annum. The broker frequently gives discounts to large accounts, and the $25 charge is waived for clients who have more than $50,000 on deposit.
Investing in Funds
A very large selection of mutual funds are available at Vanguard. In fact, there are more than 16,000 products. This selection includes hundreds of fund families. More than 2,400 carry no transaction fee and no load. Over 300 mutual funds are Vanguard products, and they have expense ratios well below 1.0%.
Target-date funds are also available at Vanguard. These are mutual funds that become less aggressive as the target date approaches. This is the time that retirement is expected to commence. These funds have become popular with retirement savers as they take a lot of the guess work out of retirement investing. Vanguard has its own suite of target-date funds, which have expense ratios below 0.17%.
More than 50 Vanguard ETF's are also available. They have expense ratios far below the industry average, and they can be traded without paying any commissions. Several could be used in a retirement account, including a REIT fund that pays consistent dividends, and a bond fund that has a stable price history.
The Vanguard website has 10 IRA calculators. They cover several different areas. For example, one determines when distributions must begin from a Traditional IRA, and how much the withdrawals must be. Another evaluates whether a user should choose a Roth or Traditional account, based on several inputs. A third calculator looks at the advantages and disadvantages of converting a Traditional IRA to a Roth.
IRA Educational Materials
Vanguard traders have access to an assortment of articles that discuss several IRA issues. One article, for example, looks at the benefits of converting an old 401(k) plan to an IRA. Another discusses Social Security payments. A pdf worksheet on retirement topics is also available to the firm's customers.
A selection of Vanguard videos that discusses a variety of retirement subjects can be found on YouTube. The videos are more difficult to find on the broker's website, so it's easier to do a search on YouTube for 'Vanguard retirement' or 'Vanguard IRA'.
The Cost of Trading
Vanguard's commission schedule is somewhat complex. Larger accounts receive discounts on trades. A regular account is any account with less than $50,000 invested in Vanguard ETF's and mutual funds. These accounts are charged $7 for the first 25 stock and ETF trades in a year. The price increases to $20 after 25 trades.
Investors who have at least $50,000 deposited in Vanguard funds receive unlimited trades at $7. An account balance of $500,000 or more reduces the commission to just $2. Clients who have $1,000,000 receive 25 trades per year commission-free. Large accounts receive other discounts as well, such as reduced fees on checkbook reorders, option trades, and fixed-income investments.
Investors who aren't confident enough to do their own retirement planning can take advantage of Vanguard's investment advisory service. Called Vanguard Personal Advisor Services, the company provides financial planning and account management for an additional fee. Although a $50,000 account balance is required, the portfolio management fee is only 0.30%.
E*Trade offers more IRA types than Vanguard. There are ten E*Trade IRA versions, including OneStop Rollover, Beneficiary IRA, and Complete IRA. These accounts will benefit certain investors in particular situations.
Although Vanguard waives certain IRA fees for accounts that are enrolled in e-statements, a Fidelity Investments IRA has no fees but still comes with paper statements. TD Ameritrade offers paper statements for free for accounts above $10,000, while Vanguard requires $50,000, and that amount must be strictly in Vanguard mutual and exchange-traded funds.
The ten IRA calculators on Vanguard's site are a larger selection than what other brokers offer. WellsTrade, by comparison, has
zero; and Capital One Investing has one. The retirement
information on TD Ameritrade's website is easier to find compared to the navigation required on Vanguard's site. A search field in the upper-right corner of the Vanguard site helps to find information, but the site is still not as easy to browse compared to the Merrill Edge and Fidelity sites. The Merrill and Fidelity sites also seem to have more educational material devoted to retirement topics.
Mutual fund investors have a good broker with Vanguard. The company has one of the largest selections of mutual funds in the
industry. The brokerage arm of USAA comes close to Vanguard in total funds available. Most other brokers have far fewer. E*Trade offers around 8,000. Scottrade has 11,000. And TradeKing clients have access to less than 9,000.
ETF traders have 55 Vanguard funds that can be traded without paying any commissions. This selection is larger than
OptionsHouse, which offers zero, and Firstrade, which has 12. Schwab clients have access to over 200.
Retirement savers may prefer meeting with a financial advisor in person for some extra guidance. Unfortunately, Vanguard
doesn't operate any branch locations. Scottrade, by comparison, has over 500, while Raymond James has more than 2,800.
Vanguard offers retirement savers a lot with its selection of IRA's, fee reduction policies, and investment advisory options. But many of Vanguard's benefits require at least $50,000 in assets. Smaller investors can find no-fee IRA's elsewhere with better trading tools and an ample supply of funds.
Article was updated on 1/18/2017.
reviewed by IRA-Reviews.com on