Chase YouInvest cost basis method

[assyadh]

Hi everyone,

I could not find any info on supported cost basis methods on Chase YouInvest taxable accounts?

I am thinking about moving everything over there but having a specific lot tax basis supported is critical for me for tax loss harvesting purposes.

Can someone here, who is a client of YouInvest check the supported cost basis methods?

Thanks!

[Sopa Conleche]

You can select specific tax lots in You Invest. I've included a screenshot of their UI for it but I've not actually used tax lot selection myself yet.

https://www.dropbox.com/s/nwp5tonkewclw ... 8.png?dl=0

[assyadh]

Thank you!!! Looks like SpecID is supported

[assyadh]

Hey Sopa Conleche,

I couldn't find the tax lot selection screen in YouInvest.

Would you mind sharing the location of the screen?

I'm doing a test with two small tax lots atm.

Thanks.

[sgboggle]

You can get to that "Tax lot selection" screen when entering a sell order. After you enter a number in the Quantity field of your sell order, text will appear at the bottom of the page saying "We'll sell tax lots using the default account method of first in first out, or you can choose specific lots", with a link that opens the Tax lot selection screen.

An annoying/confusing thing is that on the Positions page, when I expand an item and view the tax lots, it shows an average cost (and calculates the gain/loss based on that average cost). It has footnote A: "An "A" in the Cost field denotes that the security is held at Average cost." (At least, for some ETFs.)

[isaacco]

Bad news. They do Average Cost basis for all account types and there's no way to solve it. I've been back and forth with them for over a week since it is happening in my Taxable account and no way o harvest. Over several calls I get dodgy answers like "The ETF provider doesn't allow Specific ID" - what a joke!!! EVen worse, some had no idea about cost basis methods!!!

Sopa Conleche

You can select specific tax lots in You Invest. I've included a screenshot of their UI for it but I've not actually used tax lot selection myself yet.

https://www.dropbox.com/s/nwp5tonkewclw ... 8.png?dl=0

Sopa - I was hoping your screenshot was specific ID so I did the math. For each lot, multiply your "quantity" and "unit cost" - they do not equal the values in the "Cost" columns.

SO to validate they did average cost, do the following:
1. QUANTITY - Add up all your shares = 56
2. TOTAL COST - For each lot, multiply the "quantity" and "unit cost" and then add these real costs up = $5912.72
3. AVERAGE COST PER SHARE - Divide quantity and total cost = $105.58
4. Now per lot multiply, multiply the shares by this average cost per share

Now you see what they did? Your gains/losses are way off.

Also check your transaction history to see how the transaction costs are not matching what they show as "Cost" column in the tax lots. However, the calc I provided in line #2 does match what is in the transactions.

Every brokerage (Fidelity, Vanguard, Schwab, etc. default to Spec ID and allow you to change it. You Invest is trash for taxable accounts. The customer service, operations, technology and advisers I talked with had no clue it was happening, how to fix it, how to change it, etc.

I was hoping this thread was an answer to my problems, but seems we're all screwed in the same boat from these idiots.

Going to have one last chat face-to-face with these clowns this week and if they dont change it retroactively, I'm pulling all my money out and not paying them a penny in fees for closing the account. Maybe a class action would help.

[arf30]

I asked a banker about SpecId support a few months back and was told it would be added in time - it's basically a brand new product right now.

[SlowMovingInvestor]

I am willing to cut You Invest a fair amount of slack -- it is a brand new platform (although I hope they share the same back end as JP Morgan's Investment accounts).

I signed up for the Sapphire Bonus, fully anticipating it'll take them a while to get the kinks worked out. That's why I am sticking with MM funds for now, and they have VG's MM funds available -- I don't think any other discount broker does.

[isaacco]

I asked a banker about SpecId support a few months back and was told it would be added in time - it's basically a brand new product right now.

See if they told me that, it would be understandable... but instead I received tooooo many dodgy answers. Also, I am not willing to take on a tax bill that may be greater than the value I saved from free trades. Had a chat with a CPC banker today and he also said its for novices who dont care to much about that and it was a bit too premature to release as a lot of clients complaining about that.

The cost basis will get worse and worse for tax impacts on rebalancing for everyone, as time progresses. Overall, you are paying the taxman while saving on commissions which is going to be a huge loss. I would rather pay $2.99 per trade if this was fixed.

Had another chat with JPMS specialist and basically, the system is fundamentally only supposed average cost ETFs and treat them like mutual funds and it is what it is and it will not change. So whoever has ETFs is skewed. Finally an honest answer!

Just a bit devastated as I didn't expect Chase to do this. I'm just going to cut the check and exit You Invest to Fidelity and maybe VG,

Hope this helps.

[sgboggle]

The "Average cost" appears to not apply to all ETFs (though maybe it applies to most of the ones that people care about). It's weird that even ETFs in the same family are treated differently: SHV and ICSH are both ETFs from iShares; in the Positions view, SHV shows "A" (Average cost), but ICSH doesn't.

For the ETFs with "Average cost" basis, what will happen if I transfer them to another brokerage? Will the destination brokerage get the actual cost basis for each tax lot, or the average cost basis?

[isaacco]

The "Average cost" appears to not apply to all ETFs (though maybe it applies to most of the ones that people care about). It's weird that even ETFs in the same family are treated differently: SHV and ICSH are both ETFs from iShares; in the Positions view, SHV shows "A" (Average cost), but ICSH doesn't.

For the ETFs with "Average cost" basis, what will happen if I transfer them to another brokerage? Will the destination brokerage get the actual cost basis for each tax lot, or the average cost basis?

I already started the talks today to move my money out. Fidelity and Vanguard said they will have to provide the full ledger of transactions and lots if you transfer securities (not if you liquidate positions and transfer the cash). Vanguard did say they may not receive details for retirement accounts, but it is a must for taxable accounts. Turns out Vanguard also allows iShares and thousands of other ETFs to trade for free. Both company do not charge any fees for incoming securities transfers or entire account transfers.

Fidelity covers transfer fees charged by the previous brokerage while vanguard does not (Vanguard just adds those charges to your settlement account as a negative balance).

Hope this helps.

[G-Force]

I'm confused here. If you can sell specific shares (which seems to be available now as a feature) to minimize taxes, wouldn't the gains/losses still be reported correctly for tax purposes? What does 'held at average cost' mean and why does it matter?

[sgboggle]

I'm confused here. If you can sell specific shares (which seems to be available now as a feature) to minimize taxes, wouldn't the gains/losses still be reported correctly for tax purposes?

I think the issue is that even if you specify the tax lots to sell, the cost basis for each tax lot would be an average of all the tax lots instead of the actual cost basis. So, selecting the tax lot might still help you pick long term vs short term, but the cost basis being average might prevent you from reporting a loss for tax purposes even though it was a loss if looking at the actual cost.

[sgboggle]

I sent a message to Chase about this and got the following positive reply about changing the cost basis method (though I haven't tried it yet):

"The Cost basis system retains both original and average cost but will default to average cost. To update we require a signed and dated Letter of Instruction requesting the change in cost calculation. This letter can be signed, dated, and uploaded in reply to this message. Once received we will review and if in good order will make the adjustment for you."

[isaacco]

Funny how I was never given this option with all the folks I messaged and talked to over the phone. The regular JPMS brokerage account (not You Invest) has a form which you can fill out to have this done, which I brought up, and was told its not something they can flick on or off.

Nonetheless, I already kicked off the transfer of my whole account to Fidelity but if what they told you does actually work, I might consider transfering my account back. I am very highly skeptical about this being resolved anytime soon, since I told them I will need to transfer my account out and they had no come back to stop that.

Hope this works - let me know when/if it kicks in, if you don't mind.

Best of luck and godspeed, my friend.

[isaacco]

I'm confused here. If you can sell specific shares (which seems to be available now as a feature) to minimize taxes, wouldn't the gains/losses still be reported correctly for tax purposes?

I think the issue is that even if you specify the tax lots to sell, the cost basis for each tax lot would be an average of all the tax lots instead of the actual cost basis. So, selecting the tax lot might still help you pick long term vs short term, but the cost basis being average might prevent you from reporting a loss for tax purposes even though it was a loss if looking at the actual cost.

You're right - you may sell a lot as a profit and pay taxes but in reality it should have been written off as a loss. Totally counterproductive to a having a taxable account.

[assyadh]

My transfer has just completed. And I just noticed the updates on this thread.

I might keep the 75k in the account for the points perspective, but open a new brokerage at vanguard for any new contributions.

In the meantime I have sent a message to the support team to move to a specId cost basis.

[assyadh]

Reply from Chase, on the cost shown as average online:

"We appreciate the opportunity to assist you with your inquiry on the tax lots. Your tax lots may show as an average online, however, when securities are sold they are sold using the First In First Out method unless specified during the selling process of which tax lots to use. The securities sold are not tied to the average but to the specific tax lot that the security was part of."

I don't know if I should trust this answer or not.

[assyadh]

Under the cost basis of my shares I have them held with a 'C', aka covered securities.

An "A" in the Cost field denotes that the security is held at Average cost.

Hence I think this is actually just an UI bug. I will do a test with a trade once my positions goes into red.

EDIT: They are actually showing an A on all my tax lots.... I am sending another message.

As you can see below, they are indeed doing the average cost. If I compute all the lots, the average cost of a VXUS share is 49.437$ and this is what is used.. That sucks.

[assyadh]

So it looks like if you provide the cost basis yourself they switch from 'AC' to 'C' only and they now have the correct PER LOT basis.

In the example below the cost basis is correct. All I did is providing it in the Chase website:



The two IXUS holding with one share are test trades I did to evaluate the platform. As you can see they are treated as a 'C' cost basis.

The other 64 shares lot was 'AC', providing the cost basis with a specific total cost for the lot switched it to 'C' only

[assyadh]

Basically it looks like whatever is bought at Chase Youinvest can get the specid cost basis by selecting the lots. Whatever gets transferred to Chase Youinvest gets transferred at Average cost basis. Overriding the cost basis lets you switch to specId

I will make a test trade soon to confirm this.

[fedfire]

Basically it looks like whatever is bought at Chase Youinvest can get the specid cost basis by selecting the lots. Whatever gets transferred to Chase Youinvest gets transferred at Average cost basis. Overriding the cost basis lets you switch to specId

I will make a test trade soon to confirm this.

Did you use the Services > Provide Cost Basis option to override the average cost basis? I submitted that form but chase replied and said there were no adjustments needed on my account. Still seeing the AC next to each lot cost.

[assyadh]

The IXUS Cost basis was provided PRIOR to the cost basis being transferred from Vanguard by using the UI option indeed

Nevermind, I wasn't able to move the other ones (VTI/ITOT/VXUS) from AC to C once the cost basis was transferred:

We have received your e-mail regarding cost basis information. After carefully reviewing your account, the shares do not require cost basis update.

Also got this insane reply:

We are able to change the cost reporting method from average cost to original cost, but this will only apply to shares that are added to the account from the day that the change is made, it will not change the shares currently in the account. To do this a Letter of Instruction (LOI) that requests the change from average cost to original cost for the cost basis reporting is needed. This must be signed, dated, and include the account number(s) for accounts requesting to be updated. Once completed, please reply back to this message with the attachment for processing.

Needless to say the shares are going back to Vanguard once my 60k UR bonus shows up, should be in 90 + 45 days.

I hope the market does not tank, don't want to lose on TLH opportunity

[sgboggle]

They told me (on 2/14/2019) "Since we keep the original cost basis on record the adjustment will apply to the prior purchases you currently hold."
(From that, I still wasn't sure whether the change would also apply to future purchases. I want it to apply to both prior and future purchases. I haven't written them a Letter of Instruction yet; I'll try it and see what happens.)

[sgboggle]

They told me (on 2/14/2019) "Since we keep the original cost basis on record the adjustment will apply to the prior purchases you currently hold."
(From that, I still wasn't sure whether the change would also apply to future purchases. I want it to apply to both prior and future purchases. I haven't written them a Letter of Instruction yet; I'll try it and see what happens.)

I submitted the Letter of Instruction, and (3 days later) they told me the change only applies to future purchases, not prior purchases, and their earlier message to me was incorrect.

[sgboggle]

I just noticed that my prior purchases now appear with their original cost basis, not average cost.

So, maybe submitting a Letter of Instruction telling Chase to switch from average cost to original cost actually affects prior purchases, not just future purchases. (I don't think it took effect immediately; maybe 5 days of delay.) Or maybe they changed everyone's default cost basis to original instead of average. Or maybe it's just a bug in how their website is displaying it today.

[ashcan]

I submitted a Letter of Instruction and was told the shares would be original cost basis for all future purchases. I secure messaged them saying that was not acceptable and that it needs to be original cost for past purchases as well. Received a message three days later confirming all past purchases were changed to original cost. Logged into the account and all tax lots show original cost. Now that specific identification is in place, along with no trade fees for ETFs, I see no reason to not put all future purchases into You Invest.

[JustinR]

I did an incoming transfer and my cost basis hasn't arrived yet. It should arrive at the receiving brokerage within 15 days.

1) Should I submit a Letter of Instruction now to change the cost basis method, or should I wait until I see what happens?

2) I went into account settings and changed dividend/capital distributions to "pay in cash" but there's no field to choose which account it's paid to. Is it just automatically deposited into my checking account? Or...?

[arf30]

2) I went into account settings and changed dividend/capital distributions to "pay in cash" but there's no field to choose which account it's paid to. Is it just automatically deposited into my checking account? Or...?

The brokerage has a cash sweep position where money sits when it's not invested, from dividends, sales, or money that you've transferred in from your bank to trade with, etc. You usually have to transfer to/from checking manually.

[JustinR]

Chase received my cost basis info, and it's correctly updated on the positions page.

Each lot has the correct quantity and cost. Some have AC next to them (covered shares), and some are just A (non-covered shares).

However, when the ETF is collapsed, the whole thing marked as A.

I'm not planning on doing any trading here. Am I fine just leaving everything as is, and the cost basis will travel with the lots when I transfer them out?

[assyadh]

Chase received my cost basis info, and it's correctly updated on the positions page.

Each lot has the correct quantity and cost. Some have AC next to them (covered shares), and some are just A (non-covered shares).

However, when the ETF is collapsed, the whole thing marked as A.

I'm not planning on doing any trading here. Am I fine just leaving everything as is, and the cost basis will travel with the lots when I transfer them out?

I think so, if you do not touch the account.

[G-Force]

I've been back and forth with Chase several times about this to get them to fix the cost basis. Unlike user @ashcan, I was not able to get them to fix it by telling them it was unacceptable. Now they are citing IRS regulation stating why the change only applies to shares purchased going forward.

Unfortunately, we are unable to change the shares in the account to the original cost basis retroactively due to an IRS regulation. The regulation is Section 1.1012-1€(9)(i). Shares can only be updated prospectively on a going forward basis and any stock acquired before the change retains the averaged basis.

Is this correct? I've never heard of this and I thought most brokerages report original cost by default?

If I transfer this account to Schwab, will they show the original cost for each lot?

[isaacco]

I transferred out to fidelity and the transaction ledger carried over and fidelity kept the specID cost basis for me. Only good news from YouInvest (and that's due to some regulatory protocol).

Chase received my cost basis info, and it's correctly updated on the positions page.

Each lot has the correct quantity and cost. Some have AC next to them (covered shares), and some are just A (non-covered shares).

However, when the ETF is collapsed, the whole thing marked as A.

I'm not planning on doing any trading here. Am I fine just leaving everything as is, and the cost basis will travel with the lots when I transfer them out?

[isaacco]

I know the cost basis barely matters with retirement accounts, so I kept a part of my IRA at YouInvest. After some more more time with YouInvest, I may be moving that out as well as there is more information I have stumbled across.

Regarding the cash sweep position, this reserve provides 0.03% for taxable and retirement accounts . From what I know, Vanguard offers 2.01% and Fidelity at 2.09% (2.13% for IRA). But, if you let them manage your investments for you they will give you 2.25%? This pushes investors to not have a cash position at all. So if anyone feels its a time to hold cash due to economic conditions, you will not be receiving any real interest on the parked cash. Here's the link for their rate sheet: https://www.chase.com/personal/investme ... ons-yields

Then there are the astronomical fees . I wanted to buy REITs such as AGNC, NLY and VNQ (REIT ETF). Turns out they charge $250 administration fees per year? Who does that? $6 for statement copies? And for anyone planning to transfer out securities or entire account, there is a $75 fee for that (I was hit with it). Here's a link to their fees and commissions: https://www.chase.com/content/dam/chase ... hedule.pdf.

Hope this helps!

[G-Force]

Then there are the astronomical fees . I wanted to buy REITs such as AGNC, NLY and VNQ (REIT ETF). Turns out they charge $250 administration fees per year? Who does that? $6 for statement copies? And for anyone planning to transfer out securities or entire account, there is a $75 fee for that (I was hit with it). Here's a link to their fees and commissions: https://www.chase.com/content/dam/chase ... hedule.pdf.

Hope this helps!

I’ve held VNQ since late 2017 and have never been charged a fee.

[isaacco]

Then there are the astronomical fees . I wanted to buy REITs such as AGNC, NLY and VNQ (REIT ETF). Turns out they charge $250 administration fees per year? Who does that? $6 for statement copies? And for anyone planning to transfer out securities or entire account, there is a $75 fee for that (I was hit with it). Here's a link to their fees and commissions: https://www.chase.com/content/dam/chase ... hedule.pdf.

Hope this helps!

I’ve held VNQ since late 2017 and have never been charged a fee.

Just to clarify, you had held VNQ in a YouInvest account since 2017? Wasn't the account offering kicked off in Q3/Q4 2018?

However, I called in and they said the fees are mandatory for REITs. Maybe it's for directly holding equity in REITs, and not ETFs (AGNC and NLY are not ETFs). Any experience holding REITs directly with YouInvest?

[SlowMovingInvestor]

Regarding the cash sweep position, this reserve provides 0.03% for taxable and retirement accounts . From what I know, Vanguard offers 2.01% and Fidelity at 2.09% (2.13% for IRA). But, if you let them manage your investments for you they will give you 2.25%? This pushes investors to not have a cash position at all. So if anyone feels its a time to hold cash due to economic conditions, you will not be receiving any real interest on the parked cash. Here's the link for their rate sheet: https://www.chase.com/personal/investme ... ons-yields

You can buy Vanguard's Admiral MM funds at Chase. In fact, I think YouInvest is the only outside brokerage that allows this. Now, it's not a sweep account in that you explicitly need to purchase these MM funds. But that only means a delay of 1 day. No big deal if you want to park cash (i.e. not trade in and out of cash and equity).

[isaacco]

Regarding the cash sweep position, this reserve provides 0.03% for taxable and retirement accounts . From what I know, Vanguard offers 2.01% and Fidelity at 2.09% (2.13% for IRA). But, if you let them manage your investments for you they will give you 2.25%? This pushes investors to not have a cash position at all. So if anyone feels its a time to hold cash due to economic conditions, you will not be receiving any real interest on the parked cash. Here's the link for their rate sheet: https://www.chase.com/personal/investme ... ons-yields

You can buy Vanguard's Admiral MM funds at Chase. In fact, I think YouInvest is the only outside brokerage that allows this. Now, it's not a sweep account in that you explicitly need to purchase these MM funds. But that only means a delay of 1 day. No big deal if you want to park cash (i.e. not trade in and out of cash and equity).

That would be okay for a one day settlement and clearing but last sell trade took actually three days to settle and clear before I was able to use that cash for a buy transaction. At fidelity its almost instantaneous where I can sell and use those proceeds to purchase seconds later. I'm trying to appreciate the free trades but the trade-offs and issues are making it very difficult for me.

[SlowMovingInvestor]

Regarding the cash sweep position, this reserve provides 0.03% for taxable and retirement accounts . From what I know, Vanguard offers 2.01% and Fidelity at 2.09% (2.13% for IRA). But, if you let them manage your investments for you they will give you 2.25%? This pushes investors to not have a cash position at all. So if anyone feels its a time to hold cash due to economic conditions, you will not be receiving any real interest on the parked cash. Here's the link for their rate sheet: https://www.chase.com/personal/investme ... ons-yields

You can buy Vanguard's Admiral MM funds at Chase. In fact, I think YouInvest is the only outside brokerage that allows this. Now, it's not a sweep account in that you explicitly need to purchase these MM funds. But that only means a delay of 1 day. No big deal if you want to park cash (i.e. not trade in and out of cash and equity).

That would be okay for a one day settlement and clearing but last sell trade took actually three days to settle and clear before I was able to use that cash for a buy transaction. At fidelity its almost instantaneous where I can sell and use those proceeds to purchase seconds later. I'm trying to appreciate the free trades but the trade-offs and issues are making it very difficult for me.

Not for money market funds at YouInvest. It's one day, which is what other firms also require for Mutual Funds settlement (which happens at the end of the day). But certainly I would not use YouInvest for active trading. Indeed, I doubt I'll use it much one I get my Sapphire UR bonus.

ADDED: My point to be clear is that if anyone feels its a time to hold cash due to economic conditions, , there are some excellent places to hold cash in YouInvest.

[G-Force]

Just to clarify, you had held VNQ in a YouInvest account since 2017? Wasn't the account offering kicked off in Q3/Q4 2018?

Prior to Q3/Q4 2018, the self-directed new accounts were not branded "YouInvest" but it was still possible to have a self-directed investing account. That's what I was referring to.

[Mike14]

I transferred out to fidelity and the transaction ledger carried over and fidelity kept the specID cost basis for me. Only good news from YouInvest (and that's due to some regulatory protocol).

Did you previously tell Chase to update to SpecID (only showing "c" in the footnote and not "ac")?
When I changed to SpecID, the average cost footnote disappeared, but the lots are still very much average cost. I now wonder if changing to SpecID was a mistake, because on Chase's interface it is marked as SpecID even though it is not, and perhaps the lots will transfer now transfer out as such.

[Djantonnyc]

I transferred out to fidelity and the transaction ledger carried over and fidelity kept the specID cost basis for me. Only good news from YouInvest (and that's due to some regulatory protocol).

Did you previously tell Chase to update to SpecID (only showing "c" in the footnote and not "ac")?
When I changed to SpecID, the average cost footnote disappeared, but the lots are still very much average cost. I now wonder if changing to SpecID was a mistake, because on Chase's interface it is marked as SpecID even though it is not, and perhaps the lots will transfer now transfer out as such.

I want to transfer my accounts from TD to YouInvest, but I want to make there will not be issues with the cost method. Are all ETF’s held at average cost?