Vanguard Adds New $100 Account Closure and Outgoing Transfer Fee

Vanguard Adds New 0 Account Closure and Outgoing Transfer Fee Vanguard recently announced some new and/or increased fees for their brokerage accounts. Here is their updated full commission & fee schedule. The following are effective July 1, 2024:

Account closure and ACAT outgoing transfer fee: A $100 fee may be charged for account closure or transfer of account assets to another firm. The fee will not be assessed for clients who hold at least $5 million in qualifying Vanguard assets.
Broker-assisted trade commission: A $25 broker-assisted commission will be charged for each Vanguard mutual fund and Vanguard ETF trade placed over the phone and for closing transactions placed by Vanguard Brokerage Services® to cover a margin call or satisfy an outstanding debt owed in your brokerage account. Broker-assisted commissions will not be charged for brokerage accounts enrolled in a Vanguard-affiliated advisory service or for clients with $1 million or more in qualifying Vanguard assets. This previously applied to individual stocks, but not Vanguard ETFs and mutual funds.
Stock certificate deposit fee: A $100 processing fee (per CUSIP) will be charged for the deposit of physical share certificates into your brokerage account.
Class action service fee: With the introduction of this new service in which Vanguard Brokerage will facilitate filing claims on behalf of clients in an attempt to recover class action settlement funds, a fee of 20% will be deducted from these recovered funds prior to their deposit into your brokerage account.
Foreign securities and American Depositary Receipts (ADRs) dividends fee: A fee of 1% on the gross dividend amount will be charged when a dividend is paid on a foreign or ADR asset held in U.S. dollars.
Restricted security legend removal fee: A $250 processing fee may be charged for research and removal of a restriction on a security held in your brokerage account.

The following are effective July 1, 2024:

Tax filing fee for master limited partnerships (MLPs) held in an IRA will change from $300 to $500 per account.

These moves could be seen as Vanguard expanding its “at cost” philosophy. Vanguard decided that paper statements cost too much money, so they made everyone pay for them if they wanted them. Vanguard is probably seeing a lot of accounts being closed and/or transferred out, and now they want you to cover the cost to administer that as well.

An alternative view is that most of these fees are justifiable in that most of Vanguard’s competitors also charge them. Vanguard is simply becoming more like every other broker. It’s up to you to decide if that is a good thing.

While a lot of other brokers indeed have outgoing transfer fees, Fidelity still charges nothing for both full and outgoing ACAT transfers. Schwab and Merrill Edge charge $50 for a full outgoing transfer, but $0 for a partial transfer.

I would say the most surprising fee is the account closure fee. I can understand the outgoing transfer fee, but I think there is a reason why I could not find an account closure fee at Fidelity, Schwab, or Merrill Edge. If you have $5,000 invested and need to sell everything to pay for an unexpected bill, Vanguard will now ding you for another $100 on the way out. Even if justified in terms of administrative work required, it just doesn’t look so good on the public relations front.

I suppose the actionable advice is that if you were thinking about transferring multiple accounts out of Vanguard, you might want to do so before the new fee is implemented. A brokerage, Traditional IRA, and Roth IRA would add up to $300 now. Although, if I did move out, it would be for ACAT transfer bonuses which usually include outgoing ACAT fee rebates, so I don’t plan to rush into anything. If I had a smaller account, I would consider it more strongly as the ACAT fee rebates usually require a minimum asset level of $5,000 to $10,000.

During a discussion about an outgoing transfer last year, a Fidelity rep told me: “No, we won’t charge you a fee when you transfer out, and we won’t charge you a fee when you come back.” In other words, they are confident that their product is good enough that while you might leave to try out a competitor, chances are good that you’ll eventually come back.

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Vanguard Adds New $100 Account Closure and Outgoing Transfer Fee from My Money Blog.