[How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
kkwupac
Posts: 6
Joined: Wed Nov 08, 2017 3:53 pm

[How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by kkwupac » Sat Jul 14, 2018 2:51 pm

This could be a stupid question but I searched all over both here and the internet and could not find an answer, hence hopefully the wisdom of Boglehead could shred me some light.

I recently opened Vanguard New York Municipal Money Market Fund (VYFXX). The following are what I understand, but please correct me if I'm wrong:
1. There's no federal or state tax on the income from the account's monthly dividend.
2. There's no limit on ACH transfer (as opposed to the 6 per month in a regular saving account).

My question are, when I need to transfer money from VYFXX to a regular checking account:
1. Do I hit "sell" button and enter the amount? (instead of "exchange" button)
2. Is there any tax consequence on this transfer?

Thank you so much in advance! Hope everyone is enjoying the summer.

anil686
Posts: 751
Joined: Thu May 08, 2014 12:33 pm

Re: Logistics of VYFXX

Post by anil686 » Sat Jul 14, 2018 2:54 pm

I can’t speak to that particular muni fund but the national muni fund (Int med term tax exempt) has a frequent trading policy where you can sell but you cannot buy for a period of time. It is bypassed by automatic exchanges on a schedule. Otherwise - yes, you just sell what you want, when you want and it goes either to your bank account or to your settlement fund. Hope that helps answer the last part...

kkwupac
Posts: 6
Joined: Wed Nov 08, 2017 3:53 pm

Re: Logistics of VYFXX

Post by kkwupac » Sat Jul 14, 2018 3:06 pm

Thanks anil686! The only time I intend to buy is when the Total Stock and Total International Stock Index Fund pay out dividend, which seems to be once a quarter. Hopefully I should be within the trading frequency limit ...

User avatar
LadyGeek
Site Admin
Posts: 48095
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by LadyGeek » Sat Jul 14, 2018 3:08 pm

This thread is now in the Investing - Theory, News & General forum (general question). I also retitled the thread.

You get taxed on the difference between what you paid for the fund and what you sold it for. The technical term is called a Capital gains distribution.

Is this fund inside a retirement plan, such as an IRA, Roth IRA, or employer 401(k)? If so, stop. There are additional penalties for taking out money before you are 59-1/2 years old.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

PFInterest
Posts: 2252
Joined: Sun Jan 08, 2017 12:25 pm

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by PFInterest » Sat Jul 14, 2018 3:15 pm

kkwupac wrote:
Sat Jul 14, 2018 2:51 pm
My question are, when I need to transfer money from VYFXX to a regular checking account:
1. Do I hit "sell" button and enter the amount? (instead of "exchange" button)
2. Is there any tax consequence on this transfer?
1- yes. exchange would be for buying a different Vanguard fund.
2- yes. capital gains/losses either short or long term depending on the duration you have held the shares.

livesoft
Posts: 62716
Joined: Thu Mar 01, 2007 8:00 pm

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by livesoft » Sat Jul 14, 2018 3:17 pm

kkwupac wrote:
Sat Jul 14, 2018 2:51 pm
1. Do I hit "sell" button and enter the amount? (instead of "exchange" button)
2. Is there any tax consequence on this transfer?

Thank you so much in advance! Hope everyone is enjoying the summer.
I would say: Try both and see what happens up to the "Confirm" button. At that point, click on "Cancel." Then you will have answered your own question.
Wiki This signature message sponsored by sscritic: Learn to fish.

patrick
Posts: 1614
Joined: Fri Sep 04, 2009 3:39 am
Location: Mega-City One

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by patrick » Sat Jul 14, 2018 3:22 pm

1. You would use "sell" if you want to transfer the money out of Vanguard into your bank account.
2. There should be no taxes due as a result of selling the money market. Barring catastrophic circumstances, money market funds will always keep a $1.00 per share value so there should not be any capital gains or losses.

livesoft
Posts: 62716
Joined: Thu Mar 01, 2007 8:00 pm

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by livesoft » Sat Jul 14, 2018 3:29 pm

patrick wrote:
Sat Jul 14, 2018 3:22 pm
1. You would use "sell" if you want to transfer the money out of Vanguard into your bank account.
2. There should be no taxes due as a result of selling the money market. Barring catastrophic circumstances, money market funds will always keep a $1.00 per share value so there should not be any capital gains or losses.
Make sure your checking account is linked to your Vanguard account now because that is not an instantaneous process.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
LadyGeek
Site Admin
Posts: 48095
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by LadyGeek » Sat Jul 14, 2018 4:05 pm

patrick wrote:
Sat Jul 14, 2018 3:22 pm
...
2. There should be no taxes due as a result of selling the money market. Barring catastrophic circumstances, money market funds will always keep a $1.00 per share value so there should not be any capital gains or losses.
In theory, yes. In practice, the value does fluctuate. Take a look at the website: VYFXX - Vanguard New York Municipal Money Market Fund

Click on View prospectus and reports and download the summary prospectus.
Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so.
In the Overview tab --> Price and yield, the "Daily market value as of 07/13/2018" is $1.0001.

Whether or not there's enough to generate a capital gain, it's hard to say. In any case, I just wanted to help the OP understand the theory of paying taxes when you sell a stock (or fund).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
dratkinson
Posts: 4333
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by dratkinson » Sat Jul 14, 2018 5:37 pm

Mmkt funds are regulated by Investment Company Act of 1940 (act of congress), not banking regulations. So the banking limitation of 6-withdrawals/mo (savings/mmkt accounts) does not apply.

Your money is generally available upon demand, but there many be restrictions upon redemptions, and if so then they would be listed in the prospectus.

See: https://en.wikipedia.org/wiki/Money_market_fund

I use VMSXX (municipal mmkt fund) and recall the only withdrawal limit to be checks must be a minimum of $250.

Mmkt minimum balance. I asked and was told (unofficially, haven't seen it in writing) Vanguard would not complain if our taxable mmkt balance dropped to $1K, and our IRA mmkt balance dropped to $1. Have read others on forum who have withdrawn their taxable mmkt balance to $1... and no complaints noted. So we can withdraw our mmkt balance to below the min purchase limit, but it's not listed in the prospectus.



To get money into your mmkt fund.
--Buy from your linked bank account(s).
--Exchange from another fund.
--Redirect distributions (dividends, capital gains) from other funds into your mmkt fund.
--Automatic purchase/exchange into your mmkt fund.
--Direct deposit from outside source (salary allotment, SS benefit,...).



To get money out of your mmkt fund.
--Sell to your linked bank account(s).
--Exchange to another fund.
--Automatic sell/exchange from your mmkt fund.
--Write a check on your mmkt.



Agree. Set up all your linked (bank, CU,...) accounts now as process can take a few weeks. (I did mine by snail mail. My taxable investment account* is linked to my bank checking and CU savings accounts.)

* The linked accounts are to your investment account, not to an individual (mmkt) fund in your investment account. Which is okay as you can buy/sell stocks/bonds directly in your taxable investment account without the need to go through your mmkt. (Saves 2-3 business days on the process.)



Check writing. It's also beneficial to set up check writing on your mmkt, just as a CYA... in case you need the money faster than provided by the 2-business-day ACH process.

A mmkt gift check to a graduating niece/nephew will make them curious. "What's a tax-exempt money market fund, and how do I get one?" Which gives you the opportunity to begin teaching them about saving/investing for retirement. And if they are interested to learn more, then send them "The Boglehead's Guide to Investing." You clever aunt/uncle, you.



Known exceptions to Vanguard's frequent trading policy. It does not (did not, haven't checked lately) apply to mmkt funds, ST (short-term) bond funds, automatic transactions, and mailed requests.



Welcome.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

patrick
Posts: 1614
Joined: Fri Sep 04, 2009 3:39 am
Location: Mega-City One

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by patrick » Sat Jul 14, 2018 7:21 pm

LadyGeek wrote:
Sat Jul 14, 2018 4:05 pm
patrick wrote:
Sat Jul 14, 2018 3:22 pm
...
2. There should be no taxes due as a result of selling the money market. Barring catastrophic circumstances, money market funds will always keep a $1.00 per share value so there should not be any capital gains or losses.
In theory, yes. In practice, the value does fluctuate. Take a look at the website: VYFXX - Vanguard New York Municipal Money Market Fund

Click on View prospectus and reports and download the summary prospectus.
Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so.
In the Overview tab --> Price and yield, the "Daily market value as of 07/13/2018" is $1.0001.

Whether or not there's enough to generate a capital gain, it's hard to say. In any case, I just wanted to help the OP understand the theory of paying taxes when you sell a stock (or fund).
The "Price" is still listed at $1.00 and that is what price it trades at. The value listed to 4 decimal places is just an indication of the exact value of the underlying assets and is not the trading price. The warning of the prospectus just means that unlike a bank account they don't guarantee that the trading price will stay at $1.00 in times of crisis, not that it is intended to ever deviate.

New money market regulations have required institutional funds to actually transact at the exact value, but they don't apply to retail funds. See https://personal.vanguard.com/pdf/VGMMR.pdf for a discussion from Vanguard.

kkwupac
Posts: 6
Joined: Wed Nov 08, 2017 3:53 pm

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by kkwupac » Sun Jul 15, 2018 8:32 am

Thank you everyone for their help! Actually thought I post something yesterday but it doesn't show up for some reason. Especially thank you LadyGeek for moving the post to the appropriate forum, a little confused sometimes where to post. The fund is in my taxable account and is linked to a checking account. The fund is where I park the emergency saving at currently so trying to plan what to do when emergency really come. Hope everyone have a great weekend!

User avatar
LadyGeek
Site Admin
Posts: 48095
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by LadyGeek » Sun Jul 15, 2018 9:02 am

Do you have another account for accessing funds in the case of a true "emergency", meaning you need the money immediately? From your post, it doesn't sound like this is the case.

See the wiki: Emergency fund

If you have any questions, just ask. We'll help you figure it out.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

kkwupac
Posts: 6
Joined: Wed Nov 08, 2017 3:53 pm

Re: [How do I transfer money from Vanguard New York Municipal Money Market Fund?]

Post by kkwupac » Sun Jul 15, 2018 9:43 am

I think there's roughly 1 month of expense in my regular saving account. That and credit card hopefully can let me wait out the time it take to access the fund. Thanks for the article, I will definitely read it fully!

User avatar
welderwannabe
Posts: 777
Joined: Fri Jun 16, 2017 8:32 am

Re: Logistics of VYFXX

Post by welderwannabe » Sun Jul 15, 2018 10:41 am

anil686 wrote:
Sat Jul 14, 2018 2:54 pm
I can’t speak to that particular muni fund but the national muni fund (Int med term tax exempt) has a frequent trading policy where you can sell but you cannot buy for a period of time. It is bypassed by automatic exchanges on a schedule. Otherwise - yes, you just sell what you want, when you want and it goes either to your bank account or to your settlement fund. Hope that helps answer the last part...
The OP was referring to a money market and not the intermediate term bond fund...so the frequent trading policies do not apply.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

Post Reply