Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

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Topic Author
Uncle Freddie
Posts: 40
Joined: Mon Sep 21, 2020 2:13 pm
Location: Michigan

Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

Post by Uncle Freddie »

Bogleheads,

I received a confusing alert during a transaction, and I hope someone can help me understand what it actually means.


I have a Vanguard brokerage/non-retirement account; I have set up a weekly automatic buy of VTSAX in this account.

Dollar cost averaging buys of VTSAX have been running for the past few months like clockwork. The last one completed on 11/19/2021; the next is scheduled for 11/26/2021 (or whenever it ends up happening due to the holiday)

So far, so good. No complaints.




I also have a Vanguard inherited IRA account that I need to take my 2021 RMD from.

The inherited IRA holds some VTSAX.

Today's plan was to sell enough VTSAX from the inherited IRA to satisfy the RMD.

However, at the very last screen before confirming the transaction, I saw this:

Alert
Total Stock Market Index Admiral
This fund is subject to the frequent-trading policy and limits you from buying more shares until 12/26/2021.
That scared me and I cancelled the transaction.



Is this saying that if I take my RMD by selling some VTSAX in my inherited IRA account, that I WILL BREAK the weekly auto-buys of VTSAX in my brokerage/non-retirement account??? For a whole month, until 12/26/2021??? They are two entirely separate accounts.


I hope the alert is saying that after selling some VTSAX from the inherited IRA account, I cannot buy more VTSAX in the inherited IRA account until 12/26/2021.




Thanks,
Fred
livesoft
Posts: 78169
Joined: Thu Mar 01, 2007 8:00 pm

Re: Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

Post by livesoft »

Please ignore the warning. You have broken nothing. It would apply ONLY to the account that you sold in and not to all accounts. Also automated scheduled purchases are not affected.

If you happen to wish to buy more VTSAX in the account you sold in, then please come back and we can tell you how to hack around any restrictions, but I don't think that is going to be necessary.
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Brianmcg321
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Re: Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

Post by Brianmcg321 »

Its their frequent trading policy. They don't want you selling and buying in an out of funds in the same account. If you were going to do that they would want you to use an ETF. I've gotten that warning many times. You are all good.
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Topic Author
Uncle Freddie
Posts: 40
Joined: Mon Sep 21, 2020 2:13 pm
Location: Michigan

Re: Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

Post by Uncle Freddie »

Thanks livesoft and Brianmcg321, that is a relief.



Fred
rossington
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Joined: Fri Jun 07, 2019 2:00 am
Location: Florida

Re: Confused by alert about frequent-trading policy during RMD transaction involving VTSAX

Post by rossington »

Uncle Freddie wrote: Thu Nov 25, 2021 1:52 am Thanks livesoft and Brianmcg321, that is a relief.



Fred
Just to add to the above here is the Frequent Trading Policy from Vanguard:

Frequent-trading policy
If you sell or exchange shares of a Vanguard fund, you will not be permitted to buy or exchange back into the same fund, in the same account, within 30 calendar days. However, this rule does not apply to:...(it explains more)...https://personal.vanguard.com/us/whatwe ... ionpolicy
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