This is a fantastic forum with a wealth of information and really shrewd people...thanks to all of you for making me smarter with my money.
I retired early last year and had partial earnings so I had no reason to use any of my investment money last year. However, this year I wanted to pay off my house and needed some of my money at Vanguard. So I went through the steps using the Vanguard website...simple and straightforward. However, when I saw the posted amount in my bank account it was for $2500 less than I had executed using Vanguard's steps. A big surprise which really pissed me off.
Here is what happened and the built in Murphy" buried in the fine print if one can read between the lines. It is not obvious.
An individual has three choices for state withholding:
1) No tax withheld
2) The minimum state requirement (which in NC is 4% but not shown to the user)
3) A specified dollar amount
I selected a specific dollar amount for state taxes withheld ($500) which was less than the 4% minimum. No warnings or pop-ups activated telling me this amount was not going to execute. Instead the Vanguard confirmation page came up and showed exactly what I thought I was selecting and the total amount that I wanted to be deposited in my bank account. Ah, poor, ignorant fellow! "Hit the execute button and kaa ching...and voila $2500 less than planned!" Without explanation on their Confirmation page, Vanguard withheld the 4% minimum not the $500 I wanted ($3000 taken out vice $500). The selection of a specified dollar amount does not tell the individual that if the amount is less than 4% then Vanguard will automatically deduct the full 4%.
I called Vanguard and spoke with a very courteous man. I told them they had a problem and he agreed with me. I am not the first to be snookered by their less than adequate coding on their money transfer website page. Of course, once I made the execution, Vanguard said there is nothing they can do to undo the transaction. Vanguard uses the legal argument that the states require them to withhold the minimum. I reminded Vanguard they have a fiduciary responsibility first and cannot extract additional money from an account without the express permission of the client. He said he is reporting this incident to their top management and agreed that the steps and consequences of choices are not clearly explained before an individual executes a transfer.
This was my first time transferring retirement money to a bank account using Vanguard so maybe a rookie mistake. So for all you other rookies, be careful.
I retired early last year and had partial earnings so I had no reason to use any of my investment money last year. However, this year I wanted to pay off my house and needed some of my money at Vanguard. So I went through the steps using the Vanguard website...simple and straightforward. However, when I saw the posted amount in my bank account it was for $2500 less than I had executed using Vanguard's steps. A big surprise which really pissed me off.
Here is what happened and the built in Murphy" buried in the fine print if one can read between the lines. It is not obvious.
An individual has three choices for state withholding:
1) No tax withheld
2) The minimum state requirement (which in NC is 4% but not shown to the user)
3) A specified dollar amount
I selected a specific dollar amount for state taxes withheld ($500) which was less than the 4% minimum. No warnings or pop-ups activated telling me this amount was not going to execute. Instead the Vanguard confirmation page came up and showed exactly what I thought I was selecting and the total amount that I wanted to be deposited in my bank account. Ah, poor, ignorant fellow! "Hit the execute button and kaa ching...and voila $2500 less than planned!" Without explanation on their Confirmation page, Vanguard withheld the 4% minimum not the $500 I wanted ($3000 taken out vice $500). The selection of a specified dollar amount does not tell the individual that if the amount is less than 4% then Vanguard will automatically deduct the full 4%.
I called Vanguard and spoke with a very courteous man. I told them they had a problem and he agreed with me. I am not the first to be snookered by their less than adequate coding on their money transfer website page. Of course, once I made the execution, Vanguard said there is nothing they can do to undo the transaction. Vanguard uses the legal argument that the states require them to withhold the minimum. I reminded Vanguard they have a fiduciary responsibility first and cannot extract additional money from an account without the express permission of the client. He said he is reporting this incident to their top management and agreed that the steps and consequences of choices are not clearly explained before an individual executes a transfer.
This was my first time transferring retirement money to a bank account using Vanguard so maybe a rookie mistake. So for all you other rookies, be careful.
