gifting VFIAX at Vanguard

[aha]

I want to gift $400 of VFIAX to minor's UTMA at Vanguard. The minor doesn't already hold VFIAX. Will it need to meet the $3000 minimum requirement?

If the above doesn't work, what other options do I have to gift $400? Say I convert my VFIAX to VOO first, then gift VOO shares. Since VOO is over $500 now, will it just be a fractional share that gets gifted?

For conversion of mutual fund to ETF, is it entirely tax free or will there be fractional shares that need to be liquidated and trigger a tax event?

[Rocinante Rider]

My guess is that the simplest thing would be to gift the $400 of VFIAX. After it's in the UTMA account, Vanguard might convert the shares to the Investor class, VFINX, or the custodian could do the conversion to VOO if desired.

Conversion to the ETF share class is a tax-free event. The conversion will include fractional shares.

[retired@50]

If the above doesn't work, what other options do I have to gift $400?

Give $400 from your Vanguard settlement fund to the recipient's settlement fund. They could then add it to an existing investment.

Dealing with the $3,000 minimum for the mutual fund or fractional shares of an ETF aren't particularly convenient under these conditions.

Maybe you could pool your gift with others to meet the $3,000 minimum or buy at least one whole share of the ETF. Partial shares of ETFs are a hassle at Vanguard (at least according to livesoft's recent posts).

Regards,

[aha]

Kid typically receives ~$400 a year in gift money. Part of the reason to gift stocks instead of cash is to take advantage of kiddie tax.

[aha]

And what's the hassle of fractional ETF shares?

[retired@50]

And what's the hassle of fractional ETF shares?

A few samples of recent posts by user "livesoft".
viewtopic.php?p=8177395#p8177395
viewtopic.php?p=7644756#p7644756
viewtopic.php?p=7323453#p7323453

Regards,

[aha]

Is the hassle with selling 0.x shares using specID? If selling more than 1, it sounds like there's no issue. If selling 1.2 shares, Vanguard will sell 1 and then liquidate 0.2. Isn't that the same as selling 1.2? Or am I not understanding it right?

[Rocinante Rider]

Is the hassle with selling 0.x shares using specID? If selling more than 1, it sounds like there's no issue. If selling 1.2 shares, Vanguard will sell 1 and then liquidate 0.2. Isn't that the same as selling 1.2? Or am I not understanding it right?

I think you understand it right. Unless you're actively trading ETFs and need to liquidate the fractional share immediately, it's a nothing burger.

[aha]

And especially if in Roth IRA, it wouldn't make any difference, right?