joeu2004 <joeu2004[at]hotmail.com> writes:

- quote -

That is, amongst true "no-load" funds, like Vanguard.

If you're talking about broker-sold funds with loads,
there are classes of the fund where you pay a load
up front (A shares) and there are classes of the same
funds which, instead of imposing that load up front,
spread it across several years (B shares) - and if
you sell before those several years are up, they take
out the remaining several years worth of load payments.
This is called a Contingent Deferred Sales Charge or CDSC.
(google for more info).

In general, if you are selecting your own funds to
buy (or paying a fee-only advisor to do so), you
should not be buying such funds.

- quote -

It was a surprising and somewhat odd number. I hope
the OP will let us know what, exactly, it really was.
(both amount and explanation).

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

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On May 31, 3:22*pm, maniast...[at]gmail.com wrote:
- quote -

Generally not, at least not like the ones that
annuities impose. Many funds impose a "redemption
fee" for shares held for less than some nominal
period, typically 90-180 days. The redemption
fee is usually relatively small, typically 1-3%.

Nonetheless, I also assumed that the OP is talking
about some kind of surrender fee, since the OP
wrote that the agent said the "25%" penalty would
not apply if the account is maintained for at
least 2 years. That not be characteristic of
backup withholding (28%) or withholding on 401(k)
withdrawals.

However, 25% seems a little steep. If it is a
redemption fee, I suspect it is 2.5%, not 25%.
Alternatively, perhaps the OP is simply confused.

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On May 30, 1:24 pm, kastnna <kast...[at]auburnalum.org> wrote:

- quote -

I see........
Thanks yes Sun Life is a insure co that I have the IRA with.
Do funds such as Vanguard also have a surrender scale if rolling or
cashing out occurs in the first few years?
I was just looking at a fund from them (VWELX) I did not see any
mentioned

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On May 30, 2:17*pm, maniast...[at]gmail.com wrote:

- quote -

Sun Life is an insurance company. You have a retirement annuity. The
fee you are referring to is a contingent deferred sales charge (CDSC).
They are common to annuities. I am fairly sure this isn't what the OP
was referring to.

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On May 28, 6:14 am, Tad Borek <bore...[at]pacbell.net> wrote:

- quote -

I think the original poster is talking about the surrender scale that
some have,
I know I have a Sun Life policy that is also on a 7 year surrender
scale.
It starts out at X% then after each year gets less & at 7 years is
zero penalty for rolling into some other fund.
Yes it has nothing to do with the Federal penalty

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scorpionpinscer[at]gmail.com wrote:
- quote -

This question makes no sense, what's the account type and what is this
penalty?

If you mean "withholding," meaning money kept back by Vanguard and sent
to the IRS for taxes, it should have been 20%, not 25%, unless there's
some state tax withholding as well. If you mean "penalty" it's 10%, plus
perhaps a state penalty -- but it wouldn't be 25%. And there's no
significance to two years in either case.

You might have lost some vesting after two years, I guess that's a
possibility. Or - was a SIMPLE IRA, rather than a 401(k)? Those have a
25% levy (federal) if you take a distribution within the first two years.

More important: why would you blow away your retirement savings just
because a mutual fund company upset you? Cutting off your retirement to
spite your custodian, to paraphrase a bit. It's worse than just that
penalty, because you also have to pay federal and state income taxes as
well. Unless you're in a low tax bracket you could end up with less than
50 cents on the dollar.

-Tad

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On May 28, 2:05*am, scorpionpins...[at]gmail.com wrote:
- quote -


You commit financial hara kiri just because you are mad at the
management company? It's the classic cut of your nose to spite your
face. You may still have time to roll it into an IRA to avoid the
penalty.

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scorpionpinscer[at]gmail.com wrote:

- quote -

Never good to let emotion get the best of you. There is a 10% penalty
for early withdrawal, and a withholding for taxes of 20% (I'd not heard
that it's 25) but I don't know that 2 yrs meant anything anyway. The
withholding is when you take a 401(k) out and don't roll it over to
another account.

What you should have done was go to a broker who doesn't piss you off
and open an IRA, send Vanguard the paperwork and have them send the
401(k) money directly to that broker. Now, you'd have to get that money
elsewhere and open the IRA yourself if you'd like to avoid the tax and
penalty.

Joe
www.blog.joetaxpayer.com

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On May 28, 1:05*am, scorpionpins...[at]gmail.com wrote:
- quote -

"The" 10% penalty? If you are referring to the
federal penalty, you can avoid it by rolling over
those funds into an IRA within 60 days. However,
you must cover the withholding with your own funds
to avoid a (federal) 10% penalty on that amount.

(If you did an electronic custodian-to-custodian
transfer, there is no federal 10% penalty to worry
about.)

- quote -

That would be a Vanguard penalty. In addition to
"the" 10% penalty? In any case, that penalty cannot
be avoided by doing a rollover.

- quote -

This is a legal question, not a financial planning
question. You would do better by posting to
misc.legal.moderated. Better still, of course, you
might consult an attorney. Most attorney's will
tell you where you stand, in broad terms, without
charging you.

(That is not to say that you have a legal right.
Arguably, you should know when the account was
opened and the terms for closing the account.)

But before you go down that path, you should
consider speaking with a manager at Vanguard.
Be polite, even contrite, certainly not angry;
and never threaten legal action or make a legal
argument. Simply say exactly what you wrote
above. They will probably forgive the larger
Vanguard penalty.

A similar thing happen with my mother. When
she withdrew a very large sum to roll over to
another account, no one informed her that
interest for the month would not be paid unless
the money was in the account at the end of the
period. (Yup, no proration. Surprise!) She
was only a few days shy of the end of the period.

The "plebes" insisted there was nothing that
could be done; those were the rules. When we
spoke with the manager, he understood our
position. Not only did he pay the interest,
but also he forgave the account closing fee.

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Vanguard Fund pissed me off !!So I cashed in my previous employer 401k
last thursday.The agent at vanguard informed about the 10% penalty for
early withdrawl.The agent told me that because I had maintained this
account for 2 years I would not be subject to a 25% penalty on this
account.Fast forward to today when I get a return phone call from
vanguard saying that my account was "actually"opened june 13th 2006 so
I would now be assesed 25%!!!This did not sit well with me(LOL)I guess
my question is am I screwed?are vanguard responsible for their error
at the time of fund sale.Had I known I was only two weeks away I could
have made an informed decision and just called back in a couple weeks!
many thanks for any input!!!

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