ROTH IRA transfer to another brokerage firm that doesn't have the same proprietary accounts

[mariepie19]

Would like to transfer all funds I have in my current ROTH IRA with capital group, to Vanguard, in an effort to consolidate accounts, and also lower the fees on the ROTH.  Capital Group's expense ratios are more than double, almost triple what vanguard charges. 

I understand you can do a direct transfer, trustee to trustee, without any tax implications. HOWEVER, my problem is such that the account at Capital Group has all funds tied up in proprietary funds there, that aren't available at Vanguard. I've read that I can't then do a direct transfer b/c the funds don't line up? I've researched and it appears that the only way to move the funds to 'liquidate' them and transfer the cash to new vanguard account? Assuming that this triggers paying taxes, etc... ? Looking for advice on how to move the funds w/o a tax penalty...  

[dmertz]

You can't do an in-kind trustee-to-trustee transfer. As you found, you would have to sell these investments within the Capital Group Roth IRA, then do the trustee-to-trustee transfer as a cash transfer.

Selling investments within a Roth IRA has no individual tax implications.  However, selling investments in partnerships held by an IRA that generate Unrelated Business Taxable Income (UBTI) could result in the IRA owning Unrelated Business Income Tax (UBIT) that would reduce the value of your Roth IRA.

[Opus 17]

Generally speaking, you sell the investments, transfer the cash, and select new investments at the new broker.  This is all automatic and does not create any taxes or penalties with the IRS.  The gain (increase in value since you bought the investment) is not taxable as long as it stays in the IRA structure. 

As pointed out, there are certain investments that might generate income tax that has to be paid from the IRA.  We don't know what your investments are, so we don't know if this applies to you.  Certain investments might have a "surrender charge" or a "back end load" which is something you have to pay when cashing out.  Again, it is not a tax or penalty, but would reduce the amount you have to transfer.  We also can't tell if any of your investments have those kinds of charges.