[USER]

Roth IRA brokerage acct? So, I think I made a mistake. I thought I was opening a RothIRA with Vanguard but I actually opened a Roth IRA brokerage account which appears to be something different.

I opened it in December 2024. I rolled money from from my old 403b into a traditional IRA and then into this Roth IRA brokerage realizing it is a taxable event (tax bracket is low this year).

I was trying to invest the money and watching videos on how to do this made me realize my set-up was different, and that a Roth IRA brokerage account is not the same as a Roth IRA. So please give me advice.

Can Vanguard help me switch the account type if I call them or am I stuck?

Even if they do switch the account type, does that mean I lose the ability to make any 2024 Roth contributions since a regular Roth IRA wasn’t open then?

If I move money from the Roth IRA brokerage account to a Roth IRA will I have to pay taxes again or will I have to pay taxes on it this year (2025 instead of 2024) when I will likely be in a higher tax bracket?

Why would someone want a Roth IRA brokerage account?

I’m so upset because I didn’t even know a Roth brokerage was a thing – I don’t recall Vanguard giving me the option of another type of Roth when I created my account with them so I thought they just called it something slightly different.

I appreciate any help you can provide.

[Timothy]

The issue might be with rolling it over from a traditional to a ROTH. That is a taxable event.

You should have just rolled the 403b into a traditional IRA then opened a separate ROTH and started making contributions to that.

[Maribeth]

You do not have a problem here. You don’t need to change any thing. You have a perfectly good Roth account.

A Roth brokerage account is simply allowing you to invest in equities, mutual funds, ETFs etc beyond just the vanguard funds.

It is not costing you anything extra, and it provides all the same functionality as a simple Roth IRA that is not a brokerage account.

You can make the same contributions that you were planning to make.

[Aaron]

Brokerage just means you can buy exchange traded assets.

[Ben]

It’s a Roth IRA it’s the same. The issue is that you transferred traditional to a Roth which means you have to pay income taxes that you owed because traditional will give you a tax deduction going in an income tax coming out.

[Michelle]

Yea, it is called a Roth IRA Brokerage. You are fine, you don’t need to do anything.

[David]

Your questions have been answered. The account type is fine and you already knew you needed to pay taxes in the conversion. For what its worth, my Vanguard account types are called:

1. Brokerage Account – After tax and taxable investments

2. Rollover IRA Brokerage Account – Mostly where my 401k money from previous jobs live – I also use it to facilitate back door conversions.

My burden is too high to think about a complete conversion to Roth IRA right now.

3. Roth IRA Brokerage Account – Self evident.

[Kyle]

I think they might be the same. vanguard just switched all the older style accounts to “Roth brokerage accounts”.

I think it was in 2022 or 2023 my account type converted. Didn’t change my investments and it wasn’t a taxable event.

I just know if I kept the old “non-brokerage” account they were going to start charging an account fee. I suspect it had to do with their infrastructure.

Maybe the video you watched was older so it doesn’t match the current way of investing the money.

[Matthew]

Brokerage essentially just means you can trade securities in it. It’s just a name, not an account type, at least in the eyes of the IRS.

[Richard]

Just checked mine in vanguard. It’s called Roth IRA brokerage account. I’ve had this Roth IRA for about 20 years.

I don’t think you have an issue.

[Author]

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