How do I retain check writing on bond fund?

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Eureka
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How do I retain check writing on bond fund?

Post by Eureka » Sat Sep 23, 2017 3:32 pm

I received a message from Vanguard today telling me check-writing on my Short-Term Investment Grade Fund will be terminated Oct. 31 unless I take action. I have never written a check on this fund, but I want to retain the option. The message said: "If you don’t plan to write any checks soon but still need checkwriting, select the account(s) for which you'd like to keep the service." I clicked on the link, but the only options I see are "Stop payment" and "Reorder checks." I don't want to do either of these things. I just want to keep the option to write checks. What do I do?

informal guide
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Re: How do I retain check writing on bond fund?

Post by informal guide » Sat Sep 23, 2017 3:33 pm

I have the same problem.

aristotelian
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Re: How do I retain check writing on bond fund?

Post by aristotelian » Sat Sep 23, 2017 4:09 pm

Call Vanguard on Monday.

goingup
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Re: How do I retain check writing on bond fund?

Post by goingup » Sat Sep 23, 2017 4:12 pm

I'm rather glad to have these privileges reneged. Isn't it just as easy (and possibly more secure) to ACH to your checking account and write a check from there?

I imagine you should call Vanguard on Monday if the link is not working.

JBTX
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Re: How do I retain check writing on bond fund?

Post by JBTX » Sat Sep 23, 2017 4:20 pm

Wouldn't there be potential capital gains (or losses) when you wrote a check ?

Eureka
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Re: How do I retain check writing on bond fund?

Post by Eureka » Sat Sep 23, 2017 5:07 pm

JBTX wrote:
Sat Sep 23, 2017 4:20 pm
Wouldn't there be potential capital gains (or losses) when you wrote a check ?
Yes, but that's true regardless of how you redeem shares.

BigJohn
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Re: How do I retain check writing on bond fund?

Post by BigJohn » Sat Sep 23, 2017 10:12 pm

I had the same issue today. Sent VG and email describing the problem and will post the answer back here if someone else has not done so before.

JBTX
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Re: How do I retain check writing on bond fund?

Post by JBTX » Sat Sep 23, 2017 11:07 pm

Eureka wrote:
Sat Sep 23, 2017 5:07 pm
JBTX wrote:
Sat Sep 23, 2017 4:20 pm
Wouldn't there be potential capital gains (or losses) when you wrote a check ?
Yes, but that's true regardless of how you redeem shares.
Yes I fully understand that. But seems to me checking ability tends to have more of a cash account feel vs an investment account. Obviously pretty much everybody here understands the difference. But I'm not sure a lot of investors out there really do. Hey, let's pay the mortgage out of the bond fund this year! Oh crap! We have 12 different capital gains transactions this year!

Eureka
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Re: How do I retain check writing on bond fund?

Post by Eureka » Sun Sep 24, 2017 12:01 am

JBTX wrote:
Sat Sep 23, 2017 11:07 pm
Eureka wrote:
Sat Sep 23, 2017 5:07 pm
JBTX wrote:
Sat Sep 23, 2017 4:20 pm
Wouldn't there be potential capital gains (or losses) when you wrote a check ?
Yes, but that's true regardless of how you redeem shares.
Yes I fully understand that. But seems to me checking ability tends to have more of a cash account feel vs an investment account. Obviously pretty much everybody here understands the difference. But I'm not sure a lot of investors out there really do. Hey, let's pay the mortgage out of the bond fund this year! Oh crap! We have 12 different capital gains transactions this year!
That's why I use average cost basis. There's no way in hell I'm going to keep track of that. All my dividends and capital gains go directly to my checking account.

munemaker
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Re: How do I retain check writing on bond fund?

Post by munemaker » Sun Sep 24, 2017 6:04 am

The message I received said if I write a check that clears by the end of October, I will maintain the check writing privleges.

I am going to write a check for $.02 and deposit it in my checking account. That should do it.

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dratkinson
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Re: How do I retain check writing on bond fund?

Post by dratkinson » Sun Sep 24, 2017 9:57 am

Eureka wrote:
Sun Sep 24, 2017 12:01 am
JBTX wrote:
Sat Sep 23, 2017 11:07 pm
Eureka wrote:
Sat Sep 23, 2017 5:07 pm
JBTX wrote:
Sat Sep 23, 2017 4:20 pm
Wouldn't there be potential capital gains (or losses) when you wrote a check ?
Yes, but that's true regardless of how you redeem shares.
Yes I fully understand that. But seems to me checking ability tends to have more of a cash account feel vs an investment account. Obviously pretty much everybody here understands the difference. But I'm not sure a lot of investors out there really do. Hey, let's pay the mortgage out of the bond fund this year! Oh crap! We have 12 different capital gains transactions this year!
That's why I use average cost basis. There's no way in hell I'm going to keep track of that. All my dividends and capital gains go directly to my checking account.
I prefer selling by specific lot ID (to minimize CGs), which is not supported by check writing (no place on check to identify tax lots). So I find it much easier to separate selling (tax reporting) from check writing.



I went thought this exercise several years ago when I was investigating check writing on mutual funds. I decided then that a good solution should work all of the time, not just some of the time. With a good solution, I only needed one.

I could imagine selling TSM (or any non-mmkt fund), putting the proceeds into a mmkt fund (or bank/CU checking) and writing a check on it.

But I could not imagine selling TSM, putting the proceeds into a ST bond fund and then writing a check on it (maybe generating a replacement shares/wash sale issue in the process), thereby piling tax reporting issue on top of tax reporting issue.

I decided that writing checks on a ST bond fund (or any non-mmkt fund) is a partial solution at best, but with too many potential problems that it could never be a good solution. So I didn't need it.

Bottom line. I decided I only needed check writing on one fund, and it was a mmkt fund in taxable, with planned proceeds from selling everything else (taxable + rIRA) being funneled into it.

I've used the mmkt check writing privilege 2-3 times in ~10 years. Each time was a gift which provoked the same desired reaction, "What's a tax-exempt money market fund, and how do it get one?", and the same opening to talk with recipient about investing for their retirement.

I've not yet had an emergency that couldn't be handled immediately by a CC*, or a few days later by ACH money transfer. (* I've also learned I can effectively increase my monthly CC limit, if needed to increase my 2% cashback opportunity, by making interim phone payments before the due date.)



If the check writing rules are the same (I didn't look) for the ST bond fund as the TE mmkt fund, then the minimum check is $250, not $0.02. So to keep this partial solution, expect it to cost you a $250 check and a Sch D entry. :)

But it may cost you more. How? In a declining market and with reinvested distributions, we risk a wash sale with every check written on any non-mmkt fund. Too many things to remember. Too many things to go wrong. It's easier to avoid all the issues by only having check writing privileges on a mmkt fund.





Edit. It's been a while since I went through this exercise so forgot about the replacement shares/wash sale issue.
Last edited by dratkinson on Mon Sep 25, 2017 4:18 pm, edited 1 time in total.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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TheGreyingDuke
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Re: How do I retain check writing on bond fund?

Post by TheGreyingDuke » Sun Sep 24, 2017 1:09 pm

Are they changing the bank through which it clears??

Will the grandparent in current, active users?

Just a thought
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells

Eureka
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Re: How do I retain check writing on bond fund?

Post by Eureka » Sun Sep 24, 2017 4:37 pm

dratkinson wrote:
Sun Sep 24, 2017 9:57 am

Bottom line. I decided I only needed check writing on one fund, and it was a taxable mmkt fund, with planned proceeds from selling everything else being funneled into it.
Makes perfect sense. I was a bit perturbed with Vanguard on Saturday. First, I got a phone call from someone while I was sleeping asking why I hadn't voted my proxy yet (they must really be desperate to get votes this year; never been hassled before). Then, I got up and found an email from Vanguard leading to a box canyon at their website.

The vast majority of my Vanguard holdings are in an IRA, so managing taxable assets produces rather small consequences for me.

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welderwannabe
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Re: How do I retain check writing on bond fund?

Post by welderwannabe » Sun Sep 24, 2017 8:47 pm

munemaker wrote:
Sun Sep 24, 2017 6:04 am
The message I received said if I write a check that clears by the end of October, I will maintain the check writing privleges.

I am going to write a check for $.02 and deposit it in my checking account. That should do it.
I think their checkwriting policy is that a check must be for at least $250. Not sure what would happen if you wrote one smaller than $250, but they might return it. Wouldn't want you to get nailed with any returned check fees from your bank.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

BigJohn
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Re: How do I retain check writing on bond fund?

Post by BigJohn » Mon Sep 25, 2017 9:47 am

BigJohn wrote:
Sat Sep 23, 2017 10:12 pm
I had the same issue today. Sent VG and email describing the problem and will post the answer back here if someone else has not done so before.
Heard back from VG. Email apologized for the issue with incorrect link and indicated that they had recorded my desire to keep check writing with no further action required on my part.

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dratkinson
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Re: How do I retain check writing on bond fund?

Post by dratkinson » Mon Sep 25, 2017 4:48 pm

Remembered something. Checks written on non-mmkt funds can generate the replacement shares/wash sale issue. Updated my thoughts above.


Bottom line. With deference to livesoft's nice topic on "...why we shouldn't fear a wash sale", I find it's easier to write checks on only a mmkt fund (or send proceeds to bank/CU checking) because there are fewer tax-reporting issues, so fewer things I need to remember. :)
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

Eureka
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Re: How do I retain check writing on bond fund?

Post by Eureka » Mon Sep 25, 2017 7:58 pm

BigJohn wrote:
Mon Sep 25, 2017 9:47 am
BigJohn wrote:
Sat Sep 23, 2017 10:12 pm
I had the same issue today. Sent VG and email describing the problem and will post the answer back here if someone else has not done so before.
Heard back from VG. Email apologized for the issue with incorrect link and indicated that they had recorded my desire to keep check writing with no further action required on my part.
I got the same response today.

Eureka
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Location: Illinois

Re: How do I retain check writing on bond fund?

Post by Eureka » Mon Sep 25, 2017 8:04 pm

dratkinson wrote:
Mon Sep 25, 2017 4:48 pm
Remembered something. Checks written on non-mmkt funds can generate the replacement shares/wash sale issue. Updated my thoughts above.


Bottom line. With deference to livesoft's nice topic on "...why we shouldn't fear a wash sale", I find it's easier to write checks on only a mmkt fund (or send proceeds to bank/CU checking) because there are fewer tax-reporting issues, so fewer things I need to remember. :)
This is one of the main reasons I stopped reinvesting dividends and capital gains from non-IRA bond funds years ago.

munemaker
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Re: How do I retain check writing on bond fund?

Post by munemaker » Mon Sep 25, 2017 9:24 pm

welderwannabe wrote:
Sun Sep 24, 2017 8:47 pm
munemaker wrote:
Sun Sep 24, 2017 6:04 am
The message I received said if I write a check that clears by the end of October, I will maintain the check writing privleges.

I am going to write a check for $.02 and deposit it in my checking account. That should do it.
I think their checkwriting policy is that a check must be for at least $250. Not sure what would happen if you wrote one smaller than $250, but they might return it. Wouldn't want you to get nailed with any returned check fees from your bank.
OK - thanks. I have never written one so was unaware. Guess I will have to call or email.

Thanks!

Rupert
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Re: How do I retain check writing on bond fund?

Post by Rupert » Tue Sep 26, 2017 7:46 am

Eureka wrote:
Sat Sep 23, 2017 3:32 pm
I received a message from Vanguard today telling me check-writing on my Short-Term Investment Grade Fund will be terminated Oct. 31 unless I take action. I have never written a check on this fund, but I want to retain the option. The message said: "If you don’t plan to write any checks soon but still need checkwriting, select the account(s) for which you'd like to keep the service." I clicked on the link, but the only options I see are "Stop payment" and "Reorder checks." I don't want to do either of these things. I just want to keep the option to write checks. What do I do?
I visited the Vanguard site last night, and there is now a third option to the effect of "I would like to keep my check writing privileges." You just check that box, and you get a message that says (I'm paraphrasing), "Ok, you will retain check writing privileges, and we'll ask you again in a year." Easy peasy. No need to write a check to accomplish it.

Swansea
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Re: How do I retain check writing on bond fund?

Post by Swansea » Tue Sep 26, 2017 9:02 am

Rupert wrote:
Tue Sep 26, 2017 7:46 am
Eureka wrote:
Sat Sep 23, 2017 3:32 pm
I received a message from Vanguard today telling me check-writing on my Short-Term Investment Grade Fund will be terminated Oct. 31 unless I take action. I have never written a check on this fund, but I want to retain the option. The message said: "If you don’t plan to write any checks soon but still need checkwriting, select the account(s) for which you'd like to keep the service." I clicked on the link, but the only options I see are "Stop payment" and "Reorder checks." I don't want to do either of these things. I just want to keep the option to write checks. What do I do?
I visited the Vanguard site last night, and there is now a third option to the effect of "I would like to keep my check writing privileges." You just check that box, and you get a message that says (I'm paraphrasing), "Ok, you will retain check writing privileges, and we'll ask you again in a year." Easy peasy. No need to write a check to accomplish it.
Yes I got the same prompt you did, so am good for another year.

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dratkinson
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Re: How do I retain check writing on bond fund?

Post by dratkinson » Tue Sep 26, 2017 11:27 am

munemaker wrote:
Mon Sep 25, 2017 9:24 pm
welderwannabe wrote:
Sun Sep 24, 2017 8:47 pm
munemaker wrote:
Sun Sep 24, 2017 6:04 am
The message I received said if I write a check that clears by the end of October, I will maintain the check writing privleges.

I am going to write a check for $.02 and deposit it in my checking account. That should do it.
I think their checkwriting policy is that a check must be for at least $250. Not sure what would happen if you wrote one smaller than $250, but they might return it. Wouldn't want you to get nailed with any returned check fees from your bank.
OK - thanks. I have never written one so was unaware. Guess I will have to call or email.

Thanks!
Check inside your checkbook cover for instructions. I remember the $250 limit being inside my mmkt fund checkbook cover.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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