Ongoing confusion about account types at Vanguard

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abonder
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Ongoing confusion about account types at Vanguard

Post by abonder » Thu Feb 14, 2019 11:44 am

I know that this issue has been brought up multiple times and I have read many older threads regarding the issue, but I’m still confused regarding my account and why I appear to have both a regular account and a brokerage account. It used to be that I simply had one account and life was easy. Now I appear to have multiple accounts for each type of account type (brokerage and regular for my taxable and also for Roth IRA). The whole thing is quite confusing and irritating. Since my wife and I both have individual accounts (plus UGMA and 529 for kids), we seem to have endless statements come tax time and it seems needlessly confusing. Is there some way that I could
Consolidate my accounts so I don’t have all of these confusing subtypes? I thought in the past that some bogleheads had advocated against this as they felt that there were some drWbacks to this approach. Can my fellow bogleheads weigh in? I would be willing to make some sacrifices in order to achieve greater simplicity. Right now I just feel annoyed that everything appears to be fragmented. Thank you in advance for any insights.

bloom2708
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Re: Ongoing confusion about account types at Vanguard

Post by bloom2708 » Thu Feb 14, 2019 11:53 am

It should be the opposite.

Vanguard is combining the "old" accounts that held only Vanguard mutual funds with the brokerage accounts into a single brokerage account.

Before the combination, if you only held Vanguard mutual funds, you had them and a $0 brokerage account tagged along. So you had 2 accounts for every different taxable account plus your Traditional and Roth IRAs. I found that very confusing.

A few years ago I converted (I chose to do it) to the new brokerage account model. That meant that I lost 4 $0 empty accounts. We have 4 taxable accounts. 1 for joint money, 3 more, one for each kid for 50% of their college money.

If you are still seeing the two for one accounts, then you likely have not yet converted to the new single platform. Some will never do it willingly. Others are happy to have the accounts converted. Less is more for me.

I would contact Vanguard and ask them if you have been converted to the new combined platform.
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RickBoglehead
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Re: Ongoing confusion about account types at Vanguard

Post by RickBoglehead » Thu Feb 14, 2019 12:01 pm

In addition, I noted the OP is complaining about the amount of paper at tax time. If you convert to the new format, when the tax forms are issued the following year, you get two sets - one for the old "mutual fund" accounts, one for the new "brokerage" accounts. That is the last time you will see two sets, the following year will result in one set for just the brokerage accounts.
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abonder
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Re: Ongoing confusion about account types at Vanguard

Post by abonder » Thu Feb 14, 2019 12:18 pm

Thanks for the replies so far. I would like to make that conversion this year so that I can simplify taxes and documentation going forward (recognizing that 2019 will still be annoying). Is there any downside to ming this “upgrade?” In the past my impression is that some bogleheads were resistant to doing this and that was part of my concern.

Also, will cost basis and all the old information transfer forward when making the account type conversion?

Thanks for the advice so far.

sbaywriter
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Re: Ongoing confusion about account types at Vanguard

Post by sbaywriter » Thu Feb 14, 2019 1:47 pm

Someone posted this link on a similar ongoing discussion - it's a good summary, especially the comparison table, and may answer all your questions:

Vanguard brokerage https://www.vanguard.com/pdf/vbafqm.pdf

Topic Author
abonder
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Re: Ongoing confusion about account types at Vanguard

Post by abonder » Thu Feb 14, 2019 2:41 pm

Thank you for the link. That does help to clarify. I still find the process annoying and unnecessarily confusing. I guess I will have to do this for me, my wife, and the UGMA accounts. Is there anything else I need to know? Nobody has commented on why people seemed to be resisting this earlier?

sbaywriter
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Re: Ongoing confusion about account types at Vanguard

Post by sbaywriter » Thu Feb 14, 2019 3:03 pm

I think it was mostly that people upgraded without realizing what they were getting into - they were not just switching to a different web site - it was a different account type and if they had not had a brokerage account before, there were things that worked differently. For example, the settlement account.

Plus things that were set up for the former mutual fund type account now had to be set up again for the new account and even in that link above, this information tends to be a bit buried.

Edited to add: I remember there were a couple things that worked for the old platform but not for the new but they didn't apply to me so don't remember what. Maybe someone else will chime in.

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