7 day hold on conversions?

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stocknoob4111
Posts: 679
Joined: Sun Jan 07, 2018 12:52 pm

7 day hold on conversions?

Post by stocknoob4111 » Thu Jan 10, 2019 12:08 pm

This is my second time doing a backdoor Roth. Last time I did it for 2018 I had no issues. This time I ran into a few technical issues and also got inconsistent information from the VG reps.

Here are the sequence of steps:

- VMMXX (Prime Money Market) in my taxable has an existing balance of $12,550 which has existed for a few months

- I transfer $6,000 from my external savings account into the above VMMXX for a total balance of $18,550

- A day later I transfer $6,000 from VMMXX as an exchange into VTSAX (VG Total Stock Market) to my tIRA

This is where the problems start. The exchange fails midway saying funds are still clearing in VMMXX. Except, that they are NOT. Somehow the system is confusing the $6,000 I transferred into VMMXX as a hold. Since VMMXX has no specific lots to sell, it's all one pool, this is essentially bogus as the fund already had $12.5k in it and I could've done a $6k transfer regardless of the new money I transferred into the fund.

So, I had to call in and they manually amended some things so set it right but the rep appeared confused. He told me that next time I should wait for funds to clear. I told him I do not need to wait for anything as I already had $12.5k in the fund that has been there for months so the $6k could fully come out of that pool. Then he was just confused.

Anyways, they transferred me to another rep to initiate the tIRA to Roth conversion. She read me some disclosures and told me that the conversion was kicked off. A day later I saw nothing, no activity or anything.

So I call again and they tell me that I can't convert a tIRA to a Roth until after 7 days of depositing money into my tIRA. I told them that the VTSAX transaction has already settled so why not? He said that that's just Vanguard's policy. Well, after hanging up I went into the system and chose "Convert to Roth IRA", it said only part can be converted. However the part was actually 100% of the account so apparently the system is screwed up somehow. The other "locked" part said Federal Money Market but has a $0 balance in it. So I chose 100% of VTSAX and submitted the conversion, fingers crossed that it will execute successfully. However, this is counter to what the rep told me that there is a 7 day hold.

So question - is there anything in the above sequence of steps that I was missing? Is there typically any hold past the settlement date to do the Roth IRA conversion?

rkhusky
Posts: 6876
Joined: Thu Aug 18, 2011 8:09 pm

Re: 7 day hold on conversions?

Post by rkhusky » Thu Jan 10, 2019 12:38 pm

A few other people have recently found that the 7 days is not true. It is only a day or two.

Topic Author
stocknoob4111
Posts: 679
Joined: Sun Jan 07, 2018 12:52 pm

Re: 7 day hold on conversions?

Post by stocknoob4111 » Thu Jan 10, 2019 1:04 pm

rkhusky wrote:
Thu Jan 10, 2019 12:38 pm
A few other people have recently found that the 7 days is not true. It is only a day or two.
Ok, that's what I thought. Apparently the Rep was wrong and the other Rep who tried to initiate my conversion had no idea what she was doing as well. This is the first time i'm experiencing negative service from Vanguard, my past experiences have been all very good so i'm going to chalk it up to a one time thing.

rkhusky
Posts: 6876
Joined: Thu Aug 18, 2011 8:09 pm

Re: 7 day hold on conversions?

Post by rkhusky » Thu Jan 10, 2019 1:53 pm

Here is the most recent link I've seen, if you want to see if your situations are similar:
viewtopic.php?f=10&t=268668&newpost=4311883

Topic Author
stocknoob4111
Posts: 679
Joined: Sun Jan 07, 2018 12:52 pm

Re: 7 day hold on conversions?

Post by stocknoob4111 » Thu Jan 10, 2019 2:38 pm

Yeah, that does not apply to me as I had plenty of money already in my accounts to cover everything. As I said, I had $12.5k in my money market, been there for months, that can cover the transaction in full with zero issues so any new money to clear makes zero sense.

Their systems have bugs and their reps are misinformed. That is my thinking.

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