Vanguard - Cost basis not ACTUALLY switching to SpecID?

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stilts1007
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Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by stilts1007 » Sat Nov 10, 2018 3:01 pm

I opened a taxable account with Vanguard in Dec 2012 and had always just had my cost basis listed as average cost. I switched my cost basis method about a month ago for all 5 of the funds I own to SpecID (may be selling some funds at some point to rebalance or TLH). For a while the website said that cost basis info was unavailable since I had just requested a change.

Now it is showing up, with the specific lots for each fund, BUT for 4 out of the 5 funds, the cost per share is identical for each of the lots purchased. Obviously this is not accurate. From what I understand about cost basis reporting, these should all be considered "covered" shares for which specific cost basis should be available and reportable by Vanguard.

Has anyone else experienced this before? Should I just give it a little more time to hopefully sort itself out? I don't need to sell anything right this second. Worth contacting Vanguard about?

I appreciate any input or questions. Thanks!

johan851
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by johan851 » Sat Nov 10, 2018 3:59 pm

Yes, I experienced something very similar. They're notorious for screwing up cost basis like this. I'd give them a call, it may take them a couple of weeks or more to sort it out, but you'll at least get your issue in the queue. It might also fix itself if you wait, but I would just call.

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changingtimes
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by changingtimes » Sat Nov 10, 2018 4:07 pm

I just went through this, and deep somewhere in their site I found that for any purchases before you make the switch, they will continue to have the pre-switch cost basis.

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stilts1007
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by stilts1007 » Sat Nov 10, 2018 4:42 pm

Thanks for the replies. I tried digging pretty deep on the website for info on whether it would switch or not. The stuff I saw seemed to say you could switch any time up until you want to sell. The fact that 1 of the 5 funds switched correctly is extra confusing.
Just seems like calling it SpecID while not using the actual purchase prices would result in inaccurate info being sent to the IRS upon sale.

I sent an email through their website, I'll keep an eye on it and call if it isn't fixed or the email response is insufficient.

Thanks again.

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celia
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by celia » Sat Nov 10, 2018 5:10 pm

Suppose you bought a fund over time with many different prices. Your flag was set for "average" cost basis. But if you then sold part of the fund, they wouldn't know which cost basis you reported to the IRS (specific ID or average) especially if you sold before they had to start reporting the basis to the IRS. You would be leaving the other shares in your account with an unknown remaining cost basis for those shares, unless the custodian continued to use "average" price for the remaining shares.

If you make a purchase now, it makes sense to me that if you used to purchase while the "average" flag was set, they would look at how many shares you already had at the current "average" cost basis and combine that with how many shares you are now buying at today's price. Therefore the "average" cost basis is adjusted again. How can you expect to average a new purchase price with something in the past where part of it is now missing (ie, "sold") unless all "old" shares keep the "average" cost basis?

Of course, if you have detailed records showing the price you paid for every share, including re-investments, and have tracked which specific shares were sold on each date, so you can show it to the IRS when you are audited, then you may report the actual cost basis (after you enter the custodian's reported cost basis). The tax forms have a flag that allows you to "adjust" the price, but you first need to report what is on your tax form. Look for the flag the next time you do your taxes and have a sale to report.

rkhusky
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by rkhusky » Sat Nov 10, 2018 5:23 pm

If you sold any shares in any of the funds when it was listed as average cost basis, then all shares will be changed to have the same cost basis and Vanguard will list that as the basis. Any purchases made after the switch to Spec ID will list the specific cost basis on those newly purchased shares.

If you did not make any sales in a fund, then the cost basis should change from average to specific. There was a recent thread where Vanguard made an error in exactly this case. A call to Vanguard fixed it within a couple days after being transferred to Resolutions. Seems like a secure email should also work to get the ball rolling, if making a call is inconvenient. viewtopic.php?f=1&t=263190

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stilts1007
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by stilts1007 » Mon Nov 12, 2018 3:21 pm

rkhusky wrote:
Sat Nov 10, 2018 5:23 pm
If you sold any shares in any of the funds when it was listed as average cost basis, then all shares will be changed to have the same cost basis and Vanguard will list that as the basis. Any purchases made after the switch to Spec ID will list the specific cost basis on those newly purchased shares.

If you did not make any sales in a fund, then the cost basis should change from average to specific.
Thanks for the reply and the link. I get why if I had sold part of the fund, I wouldn't be able to switch cost basis afterwards. But, I have yet to make any sales in any of the funds I currently hold, so it seems it should be able to be switched. The fact that it was done correctly for one & not the others makes it extra puzzling.

I hate talking on the phone so hopefully the email can at least get the ball rolling.

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stilts1007
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by stilts1007 » Wed Nov 14, 2018 9:35 am

UPDATE:
Don't know if it was the email I sent (I never got a reply from anyone) or just a couple more days of waiting but the cost basis is fixed now on all 5 of my funds. Hooray!

rkhusky
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by rkhusky » Wed Nov 14, 2018 1:27 pm

stilts1007 wrote:
Wed Nov 14, 2018 9:35 am
UPDATE:
Don't know if it was the email I sent (I never got a reply from anyone) or just a couple more days of waiting but the cost basis is fixed now on all 5 of my funds. Hooray!
Good. It's nice to hear when problems are fixed in a timely manner.

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hornet96
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Re: Vanguard - Cost basis not ACTUALLY switching to SpecID?

Post by hornet96 » Wed Nov 14, 2018 2:46 pm

stilts1007 wrote:
Wed Nov 14, 2018 9:35 am
UPDATE:
Don't know if it was the email I sent (I never got a reply from anyone) or just a couple more days of waiting but the cost basis is fixed now on all 5 of my funds. Hooray!
That's good to hear. I've had this exact same problem 3 or 4 times in the past, and every time it took them about 3 weeks to fix my cost basis info. Hopefully they are starting to get their act together on resolving problems more timely.

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