Vanguard apparently sold FIFO rather than SpecID

[RunningBum]

I have a mix of shares in a Vanguard fund that I sold some shares of on 4/22. I have some old noncovered shares which have a gain, and some new covered shares, some of which have a gain, and others from 2014 and 2015 purchases at a loss.

When I sold, I was presented with the shares to select. I chose all of the 2014 and 2015 shares, and nothing else, intending to take the loss.

I look today, and those shares are still available under "Unrealized gains and losses". I thought it probably just hadn't settled yet, but when I looked under "Realized gains and losses", I had a fairly large gain. Selecting details, it shows the 4/22 transaction, and says it used FIFO as the cost basis.

I know for certain I did not select FIFO and I checked my cost basis method under account maintenance and it says Specific ID.

Just to verify there wasn't some confusing option, I started another transaction, and to use FIFO I would have to either select the "Change Cost Basis" link, or I would've had to have put the exact number of shares I bought in 2014 and 2015 in the box for the noncovered shares. I know for certain I did neither. I never really paid attention to the number of shares being sold. I just clicked on all the losers, noticing they were all from 2014 and 2015, and looked at the total estimated proceeds and decided that was what I wanted.

Has anyone seen this? Will this get resolved on the settlement date? Even if so, that's alarming and disturbing, and if I were to try to sell more shares today I would not have the correct option of shares to select to sell.

Or does Vanguard always sell noncovered shares first until those are exhausted, ignoring your SpecID designation?

I have an email into my Flagship rep. Just wondering if anyone else has seen this and can confirm that it will be resolved, or if they can adjust the cost basis method post-sale.

[MBSC]

Some folks at Bogleheads have the same issue based on the thread below. Contact Vanguard to resolve. From one post:

Quote:

It's a longstanding problem with their "cost basis vendor" that they are well aware of, but have not been able to fix. I have moved my holdings out of Vanguard as a direct result of this issue -- and the fact that they apparently would not have caught it on their own had I not noticed it myself.

Source: https://www.bogleheads.org/forum/viewtopic.php?t=181258

[RunningBum]

Quote:

Originally Posted by MBSC Some folks at Bogleheads have the same issue based on the thread below. Contact Vanguard to resolve. From one post: Source: https://www.bogleheads.org/forum/viewtopic.php?t=181258

Thanks, that's it exactly, and that thread is helpful. I'll follow up my already sent message with a phone call tomorrow to see if this can get fixed before the settlement.

It's disturbing that this has been going on so long and still not be fixed. This is the kind of thing that makes me question whether Vanguard is the right place for my money. One problem is, I've got over $300K in LTCGs so I feel like I'm locked into those funds. I could move them to another brokerage, but I'd think that would complicate cost basis reporting even more, not to mention a transaction fee when selling/buying/exchanging.

[pb4uski]

I just checked... I have not experienced that problem but thanks for the post as I'll stay alert for it.

[RunningBum]

I called this morning and they will change it over to the shares I intended to sell. The flagship rep said the cost basis group didn't give a reason for the glitch. I made it clear I was very unhappy and uncomfortable with them having most of my money if they can't follow my transaction instructions, and he said he'd pass that feedback along. As I said, it'd hurt me to move my taxable account elsewhere (losing my Admiral shares, for one), but my Roth and tIRA are certainly candidates. Not doing anything rash now.

[nwsteve]

Quote:

Originally Posted by RunningBum As I said, it'd hurt me to move my taxable account elsewhere (losing my Admiral shares, for one), but my Roth and tIRA are certainly candidates. Not doing anything rash now.

Just a FYI, you can replicate many of the Admiral positions with the equivalents in Vanguard ETF's. I have most of our portfolio at Fidelity and can buy and sell Vanguard ETF just like any other for 7.95 per trade. If you reinvest dividends, those are made without charge.
Nwsteve

[RunningBum]

Quote:

Originally Posted by nwsteve Just a FYI, you can replicate many of the Admiral positions with the equivalents in Vanguard ETF's. I have most of our portfolio at Fidelity and can buy and sell Vanguard ETF just like any other for 7.95 per trade. If you reinvest dividends, those are made without charge. Nwsteve

Good point, thanks. If I get to that point, I'll convert to ETFs before transferring.

[ERD50]

Quote:

Originally Posted by RunningBum ... As I said, it'd hurt me to move my taxable account elsewhere (losing my Admiral shares, for one), ...

Vanguard will let you downgrade your Admiral shares to Investor shares (a non-taxable event), and then you can do a transfer to another brokerage, again not a taxable event.

I did this when consolidating accounts in my FIL's trust after he passed. The Vanguard rep actually took the words out of my mouth (so you want to downgrade to Investor shares?) before I finished! Then we moved those shares to Fidelity.

-ERD50

[RunningBum]

Quote:

Originally Posted by ERD50 Vanguard will let you downgrade your Admiral shares to Investor shares (a non-taxable event), and then you can do a transfer to another brokerage, again not a taxable event. I did this when consolidating accounts in my FIL's trust after he passed. The Vanguard rep actually took the words out of my mouth (so you want to downgrade to Investor shares?) before I finished! Then we moved those shares to Fidelity. -ERD50

Yes, that would be "losing my Admiral shares", as I noted. At a cost of around $1000/year in expenses, so I don't consider it a good option. At Vanguard, switching to ETF shares is also not a taxable event, and usually the same in fee costs as Admiral shares. Unfortunately PRIMECAP does not have ETF shares.