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Due to a misunderstanding of Roth IRA's benefits, several years back I opened a regular investment account at Vanguard (i.e. non-tax-advantaged).

Now that I understand Roth IRA, I want to open one. However, I no longer have enough money to pass the minimum buy in requirement ($3,000 for total stock index investor share, and $10,000 for total stock index admiral share).

Is it possible to transfer my assets from the regular account into the Roth IRA? Will there be any cost?

  • Many Vanguard funds have lower minimum buy-in requirements for IRA investments, or allow lower buy-ins provided that you sign up for regular IRA contributions via automated transfer of funds. Have you looked into that? (Doesn't work for Admiral shares, though) – Dilip Sarwate Feb 15 '16 at 23:42
  • I do, initially I bought a target date fund, but I want to have a 100 percent stock mix (I'm still young). Hence I'm looking at the total stock index fund. Are there other options for a stock index fund with low buy in? – Heisenberg Feb 15 '16 at 23:49
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    @Heisenberg: As I said in my answer, look into Vanguard ETFs. VTI is equivalent to VTSAX (Vanguard Total Stock Market Admiral Shares), so you'll even get a better expense ratio than you would with Investor Shares (VTSMX). Buying ETFs is pretty straightforward. – Craig W Feb 16 '16 at 1:07
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No, IRA contributions can only be made in the form of cash (rollovers and conversions are different). You'd have to sell the investments in your taxable account, incurring capital gains or losses, then transfer the proceeds to your IRA in cash. Note that the amount you can transfer is subject to the limits on how much one can contribute to the IRA each year.

You could look into Vanguard Target Retirement funds, which have a lower $1,000 minimum investment, or Vanguard ETFs.

  • Vanguard ETF is an excellent suggestion, which seems basically identical to mutual fund sans automatic investment. – Heisenberg Feb 16 '16 at 1:56
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Since you are paying taxes on the distributions from your mutual funds anyway, instead of reinvesting the distributions back into the mutual funds, you could receive them as cash, then contribute them to your Roth IRA once you are able to open one.

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