Vanguard Account Cancellation Fee
Vanguard does not charge account closure fees for both regular brokerage joint or individual accounts.
Vanguard IRA Account Closing Cost
At Vanguard there are also no fees to cancel IRA accounts: this applies to traditional IRA, ROTH, SEP, and SIMPLE IRAs.
Popular Transfer Destinations from Vanguard
How to Close a Vanguard Account
If you want to close your Vanguard securities account, the process is very straightforward. The
broker does not charge anything to close a retirement or non-retirement account. Vanguard is one of
the companies that do not charge a fee to close an IRA. Ally Invest clients must pay $25 to close a
retirement account, while Motif Investing charges $95.
Before you close an account, you may want to liquidate all securities and withdraw the proceeds. You don’t have to do it this way. You could allow Vanguard to sell your securities instead, but most traders sell their securities and then submit the closure request.
While most Vanguard funds don’t have a short-term redemption fee, keep in mind that a few could. Many non-Vanguard funds could also have a minimum hold period. If you want to avoid paying a fee for liquidating a fund too quickly, make sure each fund has been held long enough before it is sold. The minimum holding period for most funds at Vanguard is usually not greater than 2 months, although a few funds could have longer requirements.
When you’re ready to close your trading account, give the broker a call at 1-877-662-7447, Monday through Friday, from 8 am to 10 pm, EST. Vanguard does not offer weekend hours, nor does it have an on-line chat function. If you’re closing an education account, you’ll need to contact the education savings desk at 1-866-734-4524. The desk is open only during the week, and closes at 9 pm.
If you happen to be outside the US, Vanguard offers an international phone number. It is 1-610-669-1000. Be aware of the time difference. The broker is only open during the hours stated above.
The Vanguard website also has an internal messaging system. You can use this system to contact customer service about any account issues, including making a closure request. The on-line form also has an attachment feature if you need to submit any documents.
Transferring a Vanguard Brokerage Account
If you want to transfer an account from Vanguard to another firm, you need to begin the process with the new broker. Surprisingly, Vanguard doesn’t charge anything to move an account to another broker. Most companies do charge for outgoing ACAT service. WellsTrade, for example, charges $95; while Merrill Edge customers must pay $49.95.
The new broker will have some paperwork for you to fill out. You will need your Vanguard brokerage account number along with the specific securities you want moved if you’re just doing a partial transfer. Many brokerage houses today have an on-line form you can use.
Many brokerage firms offer incentives for you to transfer your brokerage to them. You start by clicking on their
promotion link and at some point of account opening process you will be able to specify that a new
account should be funded by account transfer, also called ACAT, from another brokerage - Vanguard (go to
Broker Promotions for the list of current incentives.)
If you need any assistance in making the move, the new broker will be glad to help. Feel free to contact Vanguard as well if there are any problems with the
outgoing end.
Vanguard Cons
Vanguard is known for having mutual funds with the lowest expense ratios in the industry, but myopic pursuit of low costs has led to oversights in other areas like information technology and clear information for clients regarding target retirement funds.
Lax password rules:
Vanguard’s password rules have bare minimum requirements and do not require capitalization or special characters. However, Vanguard should not require users to remember which letter in their password is capitalized or which letter was substituted by a special character (i.e. “@” for “a”). Ideally, Vanguard should prompt users to create passwords that require a large number of characters composed of multiple, unrelated words like “greenrabbitsmunchingmarshmellows”, which are difficult for computers to guess, but easy for humans to remember. Currently, passwords at Vanguard can be as little as eight characters, and the user is never prompted to change passwords even after years of continued use. Fortunately, Vanguard has recently added two-factor authentication, which uses a numbered code sent by text message or voice to the account holder’s cell phone as a second login step.
Vanguard hidden fees »
Target date retirement funds cost more than the underlying funds:
Vanguard launched the first six target retirement funds in 2003 for a target retirement in 2005, 2015, 2021, 2025, 2035, and 2045, and later added
funds to cover every 5-year period through the year 2060. Compared to other target date retirement funds from Fidelity or Charles Schwab, Vanguard’s
funds offer more simplicity. Approximately 4-5 funds underlie Vanguard’s target retirement funds compared to 20-30 different funds that underlie
Charles Schwab and Fidelity target retirement funds. Although, the expense ratio of Vanguard’s funds is lower than competitors, there is still a
price to pay for this simplicity. Buying each of the underlying funds that comprise the Vanguard target retirement funds could reduce the expense
ratio by nearly 0.01% (see table below).
Approximating the Vanguard Target Retirement 2060 Fund Lowers Expenses:
|
|
Percentage Holding |
Expense Ratio |
Adjusted Expense Ratio |
|---|
| Vanguard Total Stock Market Index Fund |
63.2 |
.04 |
.025 |
| Vanguard Total International Stock Fund |
26.7 |
.11 |
.029 |
| Vanguard Total Bond Market II Index Fund |
8.1 |
.09 |
.007 |
| Vanguard Total International Bond Index Fund |
2 |
.12 |
.0024 |
| Total Individual Underlying Funds |
100 |
.064 |
.064 |
| Vanguard Target Retirement 2060 |
100 |
.16 |
.16 |
Extra costs for automatic rebalancing:
Investors pay an extra .01% in expenses for elementary multiplication and addition! This added expense is incurred because the target retirement fund periodically rebalances and moves from majority equity holdings (Vanguard Total Stock Market and Total International Market) to majority bond holdings. But, investors could simply rebalance themselves by choosing to buy more bonds and less equities as they near retirement. And importantly, investors can also buy bonds that approximate Vanguard’s bond funds by buying directly through the treasury department at treasurydirect.gov for no additional fees or expense.
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Let’s Talk Expenses
One of the glaring reasons that investors flock to Vanguard is their across-the-board industry beating service fees. Vanguard prides itself on providing services at a fair
value to investors. In fact, the average expense ratio of a Vanguard fund is 0.19% annually, compared to an industry average of 1.11%. Many savvy investors are aware that over the course of several years, lower expense fees can mean several thousand more dollars in your pockets. If that doesn’t sound attractive enough, it is also worth mentioning that the majority of funds also do not charge a purchase fee, redemption fee, or 12b-1 fees; saving investors even more of their hard earned money.
How to Close a Vanguard Account Disclaimer
For the most recent information on Vanguard closing fees and how to close Vanguard investing, IRA accounts, visit their website.
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