If you have an IRA with Vanguard and are considering moving your assets to a self-directed solo 401k, here are the steps to performing a rollover without triggering any taxes and penalties.
Steps to move your Vanguard IRA to a self-directed solo 401k
To transfer your funds from your Vanguard IRA, you must send them a transfer request through a Vanguard Brokerage Account IRA Distribution Form. You’ll need to be logged into your account to access the form.
Select the option to “Transfer rollover to an employer plan” and decide if you want to transfer all of your funds, or a portion. Select the options to not withhold any of your funds for federal or state income taxes, and make the check payable to your new solo 401k plan. Sign and date the form, and mail it Vanguard using the mailing address listed further down below the page.
- Step 1: Log into your Vanguard IRA brokerage account.
- Step 2: Fill out a Vanguard Brokerage IRA Distribution Form.
- Step 3: Enter your account number and select “Traditional rollover to an employer plan” option.
- Step 4: Determine how much you want to rollover from your account. If you’re looking to transfer all of your funds, select the box for moving all funds. If it’s only a partial amount, enter the dollar amount.
- Step 5: Make sure to select the boxes for “Don’t withhold federal income tax” and “Don’t withhold state income tax”.
- Step 6: Make the check payable in the name of the new solo 401k plan.
- Step 7: Sign and date the application form.
- Step 8: Mail the form to Vanguard. All transfer requests must be submitted through snail mail. Vanguard does not accept fax or electronic submissions of the transfer form.
- Step 9: The check will be mailed to you for direct deposit into your new solo 401k plan.
Vanguard transfer request mailing information
To submit your transfer form to Vanguard, mail it to:
For standard delivery:
P.O. Box 1100
Valley Forge, PA 19482-1100
For overnight delivery:
455 Devon Park Drive
Wayne, PA 19087-1815
What to do after you send your transfer form to Vanguard
Vanguard takes between 1 to 3 business days to process your form once it’s received. After you mail your transfer form to Vanguard, give them a call after around 3 to 5 business days (allowing enough time for mail to get delivered) to confirm they received your mailed request. If there are no questions or concerns, they’ll mail you a check for the requested amount.
Once you receive your check in the mail, make sure that it was made payable to your new solo 401k plan.
As the plan’s trustee, sign the back of the check and include the name of the solo 401k plan and the account number of your solo 401k plan.
Deposit the transfer check as soon as possible into your new solo 401k’s bank account.
Why move from a Vanguard IRA to a solo 401k?
Most people who qualify for a solo 401k will immediately look to rollover funds into it from other retirement plans that they own. A solo 401k has the highest contribution limits, a large Roth option, and the option to invest in any asset class.
For example, an IRA’s contribution limit is $6,000 ($7,000 if age 50+) for 2022 and $6,500 ($7,500 if age 50+) for 2023.
A solo 401k’s contribution limit is $61,000 ($67,500 if age 50+) for 2022 and $66,000 ($73,500 if age 50+) for 2023. That’s over 10x the limit of an IRA.
Prototype solo 401k plans vs self-directed non-prototype solo 401k plans
While the contribution limits of any solo 401k plan are the same, there are differences in benefits between a prototype plan and a non-prototype plan. Solo 401k plans offered by major banks are usually prototype plans, which are not self-directed.
If you want to invest in alternative assets (like real estate, crypto, startups), perform rollovers, or do a mega backdoor Roth solo 401k, you’ll need to open a self-directed solo 401k plan like the Carry Solo 401k.
With an IRA, you can only invest in traditional assets like stocks, mutual funds, and ETFs. A self-directed solo 401k, on the other hand, gives you full checkbook control. Your solo 401k plan has its own bank and brokerage accounts. As the trustee, you get complete control over your funds and can write checks from your plan without having to have a custodian as a middleman.
Will I have to pay any taxes for transferring a Vanguard IRA to a solo 401k?
No. Transfers and rollovers are not a taxable event. The money goes straight from your old plan provider (Vanguard) to your new solo 401k plan provider.
Are there any IRS penalties for transferring a Vanguard IRA to a solo 401k?
No. There are no penalties for transfers and rollovers. You’re not taking any early distributions and are simply moving funds from one retirement plan to another.
Are there any fees for transferring an IRA out of Vanguard?
No, Vanguard doesn’t charge any fees for incoming or outgoing transfers.
Can I transfer a traditional IRA to a solo 401k?
Yes, a Vanguard traditional IRA can be rolled over into a solo 401k without penalties, fees, or taxes.
Can I transfer a Roth IRA to a solo 401k?
No, you cannot rollover a Roth IRA to a solo 401k. This rule is set by the IRS, and not Vanguard or any plan provider. Per IRS rules, any retirement plan can be rolled over into a solo 401k, except a Roth IRA.