Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

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Noobvestor
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Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by Noobvestor » Thu Nov 23, 2017 10:01 pm

So I went to sell a bunch of small lots of a bond fund that were adding clutter to my brain (and for other reasons), and something went wrong. There are at least three checks along the way that I made sure were in order as I went to do the sale:

1) Spec ID is selected for my cost basis on all taxable funds

2) I specifically selected the small lots

3) I confirmed the transaction

Pretty straightforward, but I was careful along the way because I rarely sell anything in taxable. I went to check yesteday and sure enough, the small lots were all still there under the 'cost basis' view. I then checked out 'realized gains/losses' and it shows my sale as FIFO. They sold from a big lot, though it looks like roughly the amount I wanted to sell from the smaller lots. I also double-checked and yes, Spec ID is selected as the cost basis for this fund. At no point in time have I ever selected FIFO for this or any other fund. FWIW, all shares of the fund are covered shares.

I've already written Vanguard about this, but am curious: (1) Does this happen a lot? (2) Why would this happen? (3) Will they fix it and will those fixes be reflected in my online lot list? (4) Any other advice? I'm a little worried that even if they fix it once I'm going to run into this again.

Regardless, I guess this is cautionary tale: even seemingly simple transactions can go wrong. Frustrating.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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TheTimeLord
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by TheTimeLord » Thu Nov 23, 2017 10:52 pm

I had Vanguard lose the cost basis on something I held with them for years for about four months early this year. Took customer service a couple weeks to straighten it out once I notified them.
Run, You Clever Boy!

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Noobvestor
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by Noobvestor » Fri Nov 24, 2017 2:02 am

That kind of thing just scares the heck out of me. I mean this should all be simple stuff in their computer system, right? I have no plans to move away from Vanguard but ... really, they need to get their act together - I would pay slightly higher ERs for a better sense of security.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

mavi
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by mavi » Fri Nov 24, 2017 4:01 am

Cost basis issues are precicely why I moved my taxable holding out of Vanguard. I still buy Vanguard ETFs, but I hold then elsewhere.

Longdog
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by Longdog » Fri Nov 24, 2017 5:12 am

It has happened to me several times when selling stocks from my brokerage account. I have always contacted them and they have always corrected the error, after validating the original order (which was always online). Most of the time I contacted them within a few days; once it was several months later when I went to sell some more shares and their numbers didn’t agree with mine. The fact that this was not a one-time mistake means I don’t trust Vanguard to accurately track cost basis, but I do trust them to correct their errors when brought to their attention. I haven’t seen this occur on mutual funds held in their legacy account structure.
Steve

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Pete12
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by Pete12 » Fri Nov 24, 2017 6:01 am

It has happened to me a couple of times as well- they have used FIFO instead of SpecID upon a sale. They will correct it if you contact them, but it's up to you to catch the error in the first place. Take screenshots of all submitted transactions with them in case needed in the future!

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HueyLD
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by HueyLD » Fri Nov 24, 2017 6:36 am

Noobvestor,

Is your account the old mutual fund only account or the "new and improved" brokerage account?

TIAX
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by TIAX » Fri Nov 24, 2017 7:05 am

Unfortunately, Vanguard is terrible with cost basis. See this post.

Monster99
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by Monster99 » Fri Nov 24, 2017 11:12 am

I have never sold from my taxable during accumulation phase of investment for retirement. I have now retired and if Vanguard can't get SpecID vs. FIFO vs. AveCost correct, I will move to one of the other low-cost brokers immediately. no excuse for screwing up something as simple as lot specification.

dbr
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by dbr » Fri Nov 24, 2017 11:29 am

If these are not covered shares it doesn't matter what cost basis Vanguard is reporting.

There may be an issue getting Vanguard to acknowledge that you did sell Spec ID.

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grabiner
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by grabiner » Fri Nov 24, 2017 2:32 pm

This has happened to me as well, when making charitable donations from an ETF. Twice, I specified in my letter which lots to sell, and Vanguard deducted the shares from the oldest lot instead. I sent a secure Email notifying Vanguard of the issue, and it was fixed, so I still have the oldest lot intact.

When I sell non-covered mutual fund shares, Vanguard has no record of the specific ID (and has already averaged my non-covered lot), so I know that the basis is wrong. The incorrect basis is reported on my 1099-B but is not reported to the IRS. I report the correct number on my Form 8949.
David Grabiner

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GerryL
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by GerryL » Fri Nov 24, 2017 4:46 pm

I’ve been dealing with this on several stock sales I did recently in my Vanguard brokerage acct. in fact, I woke up Thanksgiving morning to find an email alerting me to a confirmation of a transaction placed the previous day. Since I am hundreds of miles from home visiting family and had definitely NOT submitted a transaction, I was a bit freaked out. I pictured my account being drained by a hack. When I was finally able to get on my brother’s computer, I checked the confirmation and found that they had recharacterized a past transaction from specid to fifo.
I was relieved that my account had not been emptied but miffed. I was on the phone first thing this AM to contest the unauthorized change. The rep apologized and said she would get it addressed and have my personal rep contact me next week with an update.
This, BTW, was the second instance of them using fifo instead of specid.

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oneleaf
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Re: Vanguard Screwed Up My Cost Basis - FIFO Instead of Spec ID

Post by oneleaf » Fri Nov 24, 2017 5:35 pm

This happened to me once, and I was too busy at the time to deal with it so I lived with it. It has made me lose faith in Vanguard. I have made dozens of sales since and they have all been correctly Spec’d but that one time they screwed up always peeved me.

This is a BIG problem. I wonder if, as a group, we can get the attention of Vanguard to heavily address this issue. This is in their best interest, since fixing these mistakes must be more expensive than getting the system corrected.

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