Vanguard takes 2 days to settle tIRA funding?

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walletless
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Vanguard takes 2 days to settle tIRA funding?

Post by walletless » Wed Jan 03, 2018 2:09 pm

Hi,

In previous years, when I did my backdoor ROTH conversion, I could do it on the 2nd trading day of the year.

This year, I initiated funding of my tIRA account on 1/1. I expected the transaction to settle at close-of-trading on 1/2, so I could initiate the conversion today (1/3). However, it seems that settlement now takes 2 days at Vanguard. I called up Vanguard and was told that my transaction will settle only today evening after trading closes.

Does anyone else see this? I always thought setting into Vanguard Mutual fund (VMFXX or Federal Money Market fund in this case) should only take 1 business day..

thx1138
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by thx1138 » Wed Jan 03, 2018 2:22 pm

Last year it took multiple days for my tIRA to settle as well despite a EFT from a long linked bank account into the MM account. This annoyed me as I was trying to do a backdoor at the end of the year and couldn't because of the delay so the conversion had to happen in the next tax year.

EDIT: And I should say the real blame lay with me for leaving it until the very last minute! Was actually no big deal, just meant being careful with tracking the non-deductible basis properly through the two tax years.
Last edited by thx1138 on Wed Jan 03, 2018 2:42 pm, edited 1 time in total.

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jhfenton
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by jhfenton » Wed Jan 03, 2018 2:25 pm

I don't have any experience with when a purchased MMF becomes Roth convertible, but while you can initiate a deposit on 1/1 and have the cash show up immediately, the "trade" to buy the MMF is effective 1/2 with settlement 1/3. That is going to be the same everywhere. It's T+1 settlement, but "T" has to be a market day. You don't speed up anything entering the deposit on 1/1 versus 1/2.

Whether or not you can convert before the system actually shows today's settlement tomorrow morning is a question I don't know. I'm not at all surprised that the system won't let you convert before it actually shows today's settlement.

boglesmind
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by boglesmind » Wed Jan 03, 2018 2:29 pm

walletless wrote:
Wed Jan 03, 2018 2:09 pm
Hi,

In previous years, when I did my backdoor ROTH conversion, I could do it on the 2nd trading day of the year.

This year, I initiated funding of my tIRA account on 1/1. I expected the transaction to settle at close-of-trading on 1/2, so I could initiate the conversion today (1/3). However, it seems that settlement now takes 2 days at Vanguard. I called up Vanguard and was told that my transaction will settle only today evening after trading closes.

Does anyone else see this? I always thought setting into Vanguard Mutual fund (VMFXX or Federal Money Market fund in this case) should only take 1 business day..
1/1 is a holiday and so the transaction was initiated effectively on 1/2 and it settled on 1/3 one business day later.

Boglesmind

somekevinguy
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by somekevinguy » Wed Jan 03, 2018 2:31 pm

same experience. It also won't let you do the conversion until the money settles (close of 1/3 so 1/4 conversion).

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walletless
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by walletless » Wed Jan 03, 2018 3:21 pm

jhfenton wrote:
Wed Jan 03, 2018 2:25 pm
Whether or not you can convert before the system actually shows today's settlement tomorrow morning is a question I don't know. I'm not at all surprised that the system won't let you convert before it actually shows today's settlement.
The system does not allow conversion until settlement is complete (which makes sense to me). I don't know what has changed, but it was definitely faster last year by one day. I can even see my statement from Jan 2017 when conversion happened on 2nd trading day!

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HueyLD
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by HueyLD » Wed Jan 03, 2018 3:26 pm

Were you on the old mutual fund platform last year and did you convert to the new brokerage platform during the year?

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walletless
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by walletless » Wed Jan 03, 2018 3:31 pm

HueyLD wrote:
Wed Jan 03, 2018 3:26 pm
Were you on the old mutual fund platform last year and did you convert to the new brokerage platform during the year?
Yes, I had a MF account until mid-2017; they converted it to a brokerage account when I changed ownership to my living trust. When doing so, they also converted my tIRA and roth IRA accounts to brokerage platform.

But in both cases I was told that it should not impact settlement timelines for mutual/index funds.

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jhfenton
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by jhfenton » Wed Jan 03, 2018 3:33 pm

walletless wrote:
Wed Jan 03, 2018 3:21 pm
jhfenton wrote:
Wed Jan 03, 2018 2:25 pm
Whether or not you can convert before the system actually shows today's settlement tomorrow morning is a question I don't know. I'm not at all surprised that the system won't let you convert before it actually shows today's settlement.
The system does not allow conversion until settlement is complete (which makes sense to me). I don't know what has changed, but it was definitely faster last year by one day. I can even see my statement from Jan 2017 when conversion happened on 2nd trading day!
And don't try to do it at 5:30 AM tomorrow either. :beer A couple times lately, including this morning, I've looked before 6:00 AM, and the previous day's transactions hadn't posted yet.

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HueyLD
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by HueyLD » Wed Jan 03, 2018 3:35 pm

walletless wrote:
Wed Jan 03, 2018 3:31 pm
HueyLD wrote:
Wed Jan 03, 2018 3:26 pm
Were you on the old mutual fund platform last year and did you convert to the new brokerage platform during the year?
Yes, I had a MF account until mid-2017; they converted it to a brokerage account when I changed ownership to my living trust. When doing so, they also converted my tIRA and roth IRA accounts to brokerage platform.

But in both cases I was told that it should not impact settlement timelines for mutual/index funds.
I think they lied. :)

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walletless
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by walletless » Wed Jan 03, 2018 5:07 pm

HueyLD wrote:
Wed Jan 03, 2018 3:35 pm
walletless wrote:
Wed Jan 03, 2018 3:31 pm
Yes, I had a MF account until mid-2017; they converted it to a brokerage account when I changed ownership to my living trust. When doing so, they also converted my tIRA and roth IRA accounts to brokerage platform.

But in both cases I was told that it should not impact settlement timelines for mutual/index funds.
I think they lied. :)
:oops: :confused

Da5id
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by Da5id » Thu Jan 04, 2018 8:05 am

They are certainly very slow to make funds available in other contexts too. I just bank transferred in money to fund my Roth. Vanguard shows transfer in on 1/2, date available for the funds on 1/9. This is for a transfer from a linked bank account, feels unnecessarily slow to me... Not going to kill me to wait a week, but why do they do this?

missingdonut
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by missingdonut » Thu Jan 04, 2018 10:05 am

Da5id wrote:
Thu Jan 04, 2018 8:05 am
Not going to kill me to wait a week, but why do they do this?
To make sure your transfer doesn't bounce.

You can still invest your contributions; you just can't take the money out.

Da5id
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by Da5id » Thu Jan 04, 2018 10:06 am

missingdonut wrote:
Thu Jan 04, 2018 10:05 am
Da5id wrote:
Thu Jan 04, 2018 8:05 am
Not going to kill me to wait a week, but why do they do this?
To make sure your transfer doesn't bounce.

You can still invest your contributions; you just can't take the money out.
An EFT, once successful, can bounce? It showed on day on in my checking account as withdrawn.

missingdonut
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by missingdonut » Thu Jan 04, 2018 10:11 am

Da5id wrote:
Thu Jan 04, 2018 10:06 am
An EFT, once successful, can bounce? It showed on day on in my checking account as withdrawn.
Yes. At first, the transaction can seem successful, but it isn't necessarily.

Now that same day ACH has begun to be used, it will help reduce these times.

Broken Man 1999
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by Broken Man 1999 » Thu Jan 04, 2018 10:35 am

Other than opening and funding 529 plans, I haven't sent Vanguard $$$$ in a long time.

I'm more interested in how long it takes to get money OUT of Vanguard and into my bank account nowadays. Though, as pointed out by missingdonut funds not available for withdrawal are available for investment. Makes sense, as if after a purchase of a fund or ETF the original deposit with Vanguard gets kicked back, Vanguard can sell the fund or ETF to get the dollars back.

Yesterday around 10:00AM I sold some Vanguard Federal Money Market fund, and the $$$$ were in my credit union account when I signed in this morning. No complaint about that time interval, works for me. :thumbsup :thumbsup

Broken Man 1999
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DaftInvestor
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by DaftInvestor » Thu Jan 04, 2018 10:38 am

As others have mentioned - 1/1 was not a business day.
I initiated the tIRA on 1/2 - the deposit showed up at end of day on 1/3 - today (1/4) I did the conversion to Roth.
This has been my recollection from prior years - I do the tIRA deposit on a given business day and then 2 days later I do the Roth conversion.

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Pete12
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by Pete12 » Thu Jan 04, 2018 10:48 am

DaftInvestor wrote:
Thu Jan 04, 2018 10:38 am
As others have mentioned - 1/1 was not a business day.
I initiated the tIRA on 1/2 - the deposit showed up at end of day on 1/3 - today (1/4) I did the conversion to Roth.
This has been my recollection from prior years - I do the tIRA deposit on a given business day and then 2 days later I do the Roth conversion.
^ Exact same timeline for me. Tried going on yesterday (1/3) to request the Roth conversion and it wouldn’t let me. Just requested it now OK

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White Coat Investor
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by White Coat Investor » Thu Jan 04, 2018 11:01 am

This is so annoying. I did my wife's in two days like usual- in to a previously opened Prime MMF on the 2nd and in to the Roth IRA and its designated investment on the 3rd. In my account, it went into a newly opened Prime MMF on the 2nd (because i was trying to avoid this like last year where it sat in the settlement fund for a couple of days), then I couldn't do anything on the 3rd as "funds weren't settled." Then today it lets me do the Roth conversion but doesn't let me designate an investment. Hopefully tomorrow.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

Atgard
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by Atgard » Thu Jan 04, 2018 12:09 pm

Da5id wrote:
Thu Jan 04, 2018 8:05 am
They are certainly very slow to make funds available in other contexts too. I just bank transferred in money to fund my Roth. Vanguard shows transfer in on 1/2, date available for the funds on 1/9. This is for a transfer from a linked bank account, feels unnecessarily slow to me... Not going to kill me to wait a week, but why do they do this?
I initiated my ACH on 1/1, and got the same message that it wouldn't be available until 1/9.

However, it looks like it all settled at the end of yesterday (1/3), and today (1/4) I was able to convert from traditional to Roth and purchase shares immediately in the Roth. So I'd check today or tomorrow, it will probably be ready before the 9th.

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walletless
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by walletless » Thu Jan 04, 2018 3:56 pm

I was finally able to do the conversion today... but Vanguard Interface is so poor when it comes to purchasing new funds.I want to purchase a brand new admiral fund ($10K min), and pay for it using the $5,500 new cash (from conversion) and $5,000 by selling another fund (Emerging Market). However, the UI does not allow trading multiple funds to buy the new fund. Instead, I have to purchase the investor funds today, then in another transaction sell $5K of EM fund to purchase investor share; and finally request an up-convert to admiral next trading day (assuming the total value still stays above $10K on next day). So annoying :-(
White Coat Investor wrote:
Thu Jan 04, 2018 11:01 am
Then today it lets me do the Roth conversion but doesn't let me designate an investment. Hopefully tomorrow.
In my case I was able to do the conversion, and trade immediately after that. The new money should show up under "tradeable balance". Is that not the case for you?

ThisTimeItsDifferent
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by ThisTimeItsDifferent » Thu Jan 04, 2018 4:43 pm

and now it takes 7 days for the funds to be available in the tIRA brokerage account when moved in from a bank account ACH before one can convert it to a Roth. I don't think it was like that last year....

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White Coat Investor
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Re: Vanguard takes 2 days to settle tIRA funding?

Post by White Coat Investor » Thu Jan 04, 2018 10:54 pm

ThisTimeItsDifferent wrote:
Thu Jan 04, 2018 4:43 pm
and now it takes 7 days for the funds to be available in the tIRA brokerage account when moved in from a bank account ACH before one can convert it to a Roth. I don't think it was like that last year....
It was. I thought by using Prime instead of the settlement fund and having the money already at Vanguard this year that I'd avoid that problem. No dice.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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