Vanguard Transfer Mistake

[pancake19]

Hi all,

More than a month ago I initiated my recurring mega backdoor transfer (vanguard aftertax 401k transfer to vanguard roth IRA).

Two weeks ago I noticed that instead of transferring the funds to my rIRA they moved all money to my brokerage account. I called them, they admitted it was their mistake, and started to "fix it". Now it's has been two weeks, and the issue is still not fixed. I called back on status and they said it just takes time and they are still working on it.

While I don't think I have any direct expenses so I don't think they'll offer me anything even though it has left my money parked in the cash sweep all this time. Anyone have experience in this?

[fabdog]

try the search box upper left. there have been several threads on similar issue (Roth or IRA transfers going into brokerage accounts, then having to be fixed)

Mike

[RickBoglehead]

In my experience, when Vanguard makes a mistake they make it right by backdating the correction. Of course if you had intended it to go into an account and then make an investment (vs. make a direct investment), they won't do that. But if it was a "purchase X mutual fund" auto transaction that did not happen, they should backdate it and make the transaction.

[barnaclebob]

Why are you doing automated mega backdoor roth transfers? To minimize gains on the after tax money? That seems like its asking for trouble to save a few $ in taxes each year.

[pancake19]

try the search box upper left. there have been several threads on similar issue (Roth or IRA transfers going into brokerage accounts, then having to be fixed)

Mike

Tried and went through 3 pages of it, there's a large variety of mistakes and I didn't see this issue (wrong tax records, missing money, duplicate transfers, etc). If you know of a good one would be much appreciated though.

In my experience, when Vanguard makes a mistake they make it right by backdating the correction. Of course if you had intended it to go into an account and then make an investment (vs. make a direct investment), they won't do that. But if it was a "purchase X mutual fund" auto transaction that did not happen, they should backdate it and make the transaction.

Yeah I didn't, for whatever reason the rollover form only allows you to transfer directly into mutual funds and not ETFs or individual names, so I always filled out the form to just keep it in money market...

Why are you doing automated mega backdoor roth transfers? To minimize gains on the after tax money? That seems like its asking for trouble to save a few $ in taxes each year.

While I wish there was an automated feature, there isn't. Are you just pointing out folks shouldn't sweep the after tax annually? How often do you suggest? It's kind of like the TLH question but I have generally settled on once or twice a year.

[barnaclebob]

Why are you doing automated mega backdoor roth transfers? To minimize gains on the after tax money? That seems like its asking for trouble to save a few $ in taxes each year.

While I wish there was an automated feature, there isn't. Are you just pointing out folks shouldn't sweep the after tax annually? How often do you suggest? It's kind of like the TLH question but I have generally settled on once or twice a year.

You said it was a recurring transfer, typically that means automated when referencing payment systems. It sounds like you meant your recurring manual yearly/biannual transfer.

I just do my mega backdoor transfer once a year in Jan and pay what the gains are at tax time. One year I was lucky enough to pay taxes on over $1000 in gains. Most years its much less than that. If you were to do a mega backdoor transfer after every paycheck it would minimize taxes. My mega backdoor process involves depositing a physical check so its not super convenient.

[HomeStretch]

Vanguard made this mistake based on a mega back door that you correctly entered online?

Good reason for keeping print screens of online transactions before and after hitting “Submit” if needed to prove to Vanguard there was an error. The print screens were useful in getting Vanguard to correct the cost basis method used for a TLH sale I made (account set to “SpecID”, print screens and initial trade confirmation showed same along with tax lots sold, a week later Vanguard inexplicably issued a revised trade confirmation changing the cost basis method to “average cost”.)

[frugaltigris]

Vanguard made this mistake based on a mega back door that you correctly entered online?

Good reason for keeping print screens of online transactions before and after hitting “Submit” if needed to prove to Vanguard there was an error. The print screens were useful in getting Vanguard to correct the cost basis method used for a TLH sale I made (account set to “SpecID”, print screens and initial trade confirmation showed same along with tax lots sold, a week later Vanguard inexplicably issued a revised trade confirmation changing the cost basis method to “average cost”.)

If one has to keep print screens for transactions at Vanguard so that their mistakes can be corrected, is it worth staying there? I have an account at Vanguard and such posts make me think whether I should move assets elsewhere.

[HomeStretch]

If one has to keep print screens for transactions at Vanguard so that their mistakes can be corrected, is it worth staying there? I have an account at Vanguard and such posts make me think whether I should move assets elsewhere.

I keep print screens of online transactions and the trade confirmations as a best practice for all brokerages I use.

I would prefer no errors but Vanguard corrected it quickly. It is not enough to cause me to move my accounts. Vanguard’s money market rates are higher and VTSAX is more tax efficient in my Taxable account than other brokerage’s comparable money market/mutual funds.

[pancake19]

Vanguard made this mistake based on a mega back door that you correctly entered online?

Good reason for keeping print screens of online transactions before and after hitting “Submit” if needed to prove to Vanguard there was an error. The print screens were useful in getting Vanguard to correct the cost basis method used for a TLH sale I made (account set to “SpecID”, print screens and initial trade confirmation showed same along with tax lots sold, a week later Vanguard inexplicably issued a revised trade confirmation changing the cost basis method to “average cost”.)

I understand your sentiment but it isn't really the issue. Instructions were not online, that would actually be an upgrade. Vanguard has to physically mail me a form (can't print myself) and I mail the form back.

However, the issue is not whether I prove they have made a mistake -- I already can and they have already admitted to it. The problem is it is taking weeks to fix it and I'm out of the market during all this time.

[Chicken lady]

I've asked for an issue of slow/no action be referred to a supervisor for review and correction after very briefly describing the hiccup. My issue was quickly resolved once a supervisor interceded. There is a limit to what the flagship/customer support folks can resolve independently.

Good luck!