Self Directed IRA and Vanguard

[Yohannes Kifle]

This is just a post about some things I learned about opening a self directed IRA.

I recently opened a self directed IRA and transferred some after-tax money in my employer's 401k managed by Vanguard, to the self directed IRA. I'm not a CPA so definitely consult them about if this is something you should think of doing.

One thing I learned is that you will have to pay taxes on any gains you made on the after-tax money you transfer. And you are taxed based on the percentage you transfer. So if you transfer 50% of you after-tax money, 50% of the gains will be taxed.

The other thing to note is that my self directed IRA custodian said they needed to initiate the transfer themselves by sending a transfer form to Vanguard. I'm not sure if this is the case for all custodians. But the Vanguard department that handles my 401k does not accept third party transfer forms. After many days of calling Vanguard and the custodian I finally figured out Vanguard's IRA department does accept third party transfer forms. So I first transferred the after-tax money to a Vanguard IRA account. And from there I could transfer it to the custodian. I know it's a very specific scenario but I hope that helps anyone that is trying to do what I did.

[Minna Nah]

@Yohannes Kifle

we have seen this with some custodians, they have their owns forms but this is uncommon. In most cases receiving custodian would provide a transfer request form.