Will converting VG mutual fund to ETF screw up my cost basis?

[thousandaire]

Hi all,

I have two Vanguard taxable brokerage accounts (one mutual fund, one ETF) that I'm trying to simplify into one ETF holding:

• $50k in VTSAX ($40k cost basis)

• $300k in VTI ($127k cost basis)

I want to convert my $50K in VTSAX to VTI, but I want to maintain the difference in cost basis so that I could sell more tax friendly shares if I wanted.

This will be my second MF to ETF conversion, and I'm pretty sure I screwed up the first time, so soliciting help here. When I look at my cost basis for the $300k VTI, there are 10 pages of individual lots that all have the same cost per share. In other words, the setting may be "Spec ID" now, but it looks like vanguard averaged the cost at some point when I converted.

Trying to avoid that this time. When I pull up the conversion page online, VG shows this disclaimer related to cost basis, which frankly I don't understand. Any tips?

COST BASIS INFORMATION FOR NON-RETIREMENT ACCOUNTS:

If you are not already locked into the average cost method by a sale, transfer, partial conversion or other disposition of your Vanguard mutual fund shares, we’ll have you revoke the average cost method for any eligible shares of Vanguard mutual funds and apply the First In First Out (FIFO) cost basis method prior to this conversion to the ETF share class.

If you are already locked into the average cost method by a sale, transfer, partial conversion or other disposition of your Vanguard mutual fund shares, we’ll have you exit the average cost method for any eligible shares of Vanguard mutual funds and apply the FIFO cost basis method prior to this conversion to the ETF share class. This means share lots acquired prior to the conversion will be listed individually with the averaged cost.

By clicking submit you agree to convert your mutual fund shares to the ETF share class and are instructing Vanguard to revoke your average cost election.

[Uniballer]

It worked fine for me. In particular, all of my MF lots converted to ETFs have their own cost basis.

[stan1]

Editied: I switched to specific ID as soon as it was offered, and never had any sales using average cost basis. It sounds like you might have sold some shares using average cost basis maybe a very long time ago.

Vanguard will update the cost basis for covered shares and everything that is online right now (in my case they do have cost basis for some uncovered shares going back to 2005 but not those purchased in 2004 or earlier). If you look at your current holdings cost basis details you may see what I see, which is covered shares 2012 and later, uncovered shares for 2005-2011 that have a lot identified with date acquired and cost basis information, and one blob with no dates or other information showing the total shares purchased in 2004 and earlier. However, you may not see what I see.

This page should look the same when they do the share conversion. The lots you have now will reflect the conversion, the blob will not. It may take a few days.