You can have as many IRA accounts as you want (whether Roth or Traditional), so you can have a Roth IRA with American Funds and
another Roth IRA with Vanguard if you like. One disadvantage of
having too many IRA accounts with small balances in each is that most
custodians (including Vanguard) charge an annual fee for maintaining IRA
accounts with small balances but waive the fee if the balance is
large. So it is best to keep your Roth IRA in just one or two funds with just one or two custodians until such time as investment returns plus additional contributions made over the years makes the balances large enough to diversify further. Remember also that
you cannot contribute the maximum to each IRA; the sum total
of all your IRA contributions (doesn't matter whether to Roth or to Traditional IRAs) for any year must satisfy the
limit for that year.
You can move money from one IRA of yours to
another IRA (of the same type) of yours without any tax issues to worry about. Such movements (called rollovers or transfers) are
not contributions and do not count towards the annual contribution limit. The easiest way to do move money from one IRA account to
another IRA account is by a trustee-to-trustee
transfer where the money goes directly from one custodian (American
Funds in this case) to the other custodian (Vanguard in this case).
The easiest way of accomplishing this is to call Vanguard or
go online on their website, tell them that you are wanting to
establish a Roth IRA
with them, and that you want to fund it by transferring money
held in a Roth IRA with American Funds. Give Vanguard the account
number of your existing American Funds IRA, tell them how much
you want to transfer
over -- $1000 or $20,000 or the entire balance as the case may be --
and tell Vanguard to go get the money. In a few days' time, the
money will appear in your new Vanguard Roth IRA and the American
Funds Roth IRA will have a smaller balance, possibly a zero balance,
or might even be closed if you told Vanguard to collect the entire
balance.
DO NOT approach American Funds and tell
them that you want to transfer money to a new Roth IRA with Vanguard:
they will bitch and moan and drag their heels about doing so because
they are unhappy to lose your business, and will probably
screw up the transfer. Talk to Vanguard only. They are eager to get their
hands on your IRA money and will gladly take care of the whole thing
for you at no charge to you.
DO NOT cash in any stock shares, or mutual fund shares, or whatever
is in your Roth IRA in preparation for "cashing out of the old account".
There is a method where you take a "rollover distribution" from your
American Funds Roth IRA and then deposit the money into your
new Vanguard Roth IRA within 60 days, but I recommend most strongly against using this because too many people manage to screw it up. It
is 60 days, not two months; the clock starts from the day American
Funds cuts your check, not when you get the check, and it is stopped
when the money gets deposited into your new account, not the day you
mailed the check to Vanguard or the day that Vanguard received it,
and so on. In short, DO NOT try this at home:
stick to a trustee-to-trustee transfer and avoid the hassles.