Vanguard Federal Money Market Fund (VMFXX) - Difficulty Reconciling

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Brad95X
Brad95X Member ✭✭
edited May 23 in Investing (Windows)

Does anyone know the correct way to reconcile a Vanguard brokerage account when Vanguard Federal Money Market Fund (VMFXX) is the settlement fund? When VMFXX pays interest it is considered a dividend rather than interest income… so one interest income payment at the end of the month shows up twice in the Quicken register… first as a DIV, then again as REINVDIV… and it often doesn't reconcile after that. Any suggestions?

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  • Jon
    Jon SuperUser, Mac Beta Beta
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    There's two ways that reinvested dividends can be reported. One is to have two transactions: a dividend payment transaction and a purchase transaction for the reinvestment of the dividend back into the fund. The other (and the one I prefer) is to just have a single reinvested dividend transaction that covers both the dividend payment & the reinvestment.

    It sounds like you got a bit of both. I think you can probably just delete the DIV transaction, the REINVDIV should cover both the dividend & the reinvestment of that dividend.

  • Brad95X
    Brad95X Member ✭✭
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    @Jon

    Thank you for your help. I tried your suggestion and wasn't able to resolve my issue so far. I oversimplified my original question… it's actually every transaction that involves the VMMF settlement fund gives me reconciliation problems, buying stocks, interest income/dividend reinvestment etc. I'm hoping someone has dealt with this type of Vanguard settlement fund specifically and can tell me the how to handle reconciliation as Quicken's default categorization doesn't reconcile.

  • Jon
    Jon SuperUser, Mac Beta Beta
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    Just to clarify, are you using Quicken Windows as your profile says? If so, I'll ask a moderator to move this over to one of the Quicken Windows forums, you'll probably get more appropriate help over there.

  • Brad95X
    Brad95X Member ✭✭
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    Yes I am using Quicken Windows Classic Premier.
    I didn’t realize I had posted in Quicken for Mac.
    That would be great if you could ask a moderator to move me to the correct forum. Thank you.

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited May 23
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    The Vanguard Federal Money Market fund is VMFXX and is the default settlement fund for Vanguard brokerage accounts. Is that what you hold?

    For me, the monthly dividend reinvestments from VMFXX download as ReinvDiv. Do you see something different?

    When another security pays a dividend, it shows as a Div followed by a Bought of VMFXX for the same amount. If several securities pay dividends on the same day, you should see several Divs and a Bought for the total amount.

    You should not see any interest income from the money market fund. Because it is a mutual fund, all of its income is correctly classified as dividends.

    The cash balance of the account should always end up as 0.

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  • Brad95X
    Brad95X Member ✭✭
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    Yes sir VMFXX is what I hold. I have been a Quicken windows classic deluxe user for at least 10 years, I just upgraded to quicken Windows classic premier about a month ago. I don’t know if it categorizes things any different differently? Probably not. But in my confusion with the categorization I have deleted some previous transactions to make everything reconcile and now I have kind of a mess on a couple of accounts that won’t reconcile. I’m not sure how to describe it in this forum. I guess I just need to go back transaction by transaction and get them reconciled and hopefully learn from your all’s answers above to avoid future problems. Thank you for your help!

  • Bob_L
    Bob_L SuperUser ✭✭✭✭✭
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    Another issue that occurs with settlement funds is the delay that occurs, typically one day. For example a purchase of an ETF can then result in a negative cash balance in quicken until the settlement fund is sold the next day to generate the needed cash. Takes a while to get used to that as compared to how it used to be before Vanguard switched users to the new brokerage accounts.

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  • Brad95X
    Brad95X Member ✭✭
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    Thank you, you’re right this just started happening since Vanguard switched me to the new brokerage accounts. I may have been deleting transactions too early, before the settlement fund was sold the next day, to try and force reconciliation. Thanks for bringing this up, I will try to be more patient and see if it will reconcile in a few days without me deleting any transactions. It definitely may have been caused by me being impatient because like you said it takes a while to get used to this newer more delayed reconciliation/completion of transactions. Your reply was very helpful.

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited May 23
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    That is right, generally you do not need to delete or edit any downloaded transactions, just wait a couple of days for the settlement fund to settle and the cash balance to go to zero.

    One exception is when there is a long or short term capital gain distribution from a fund in a Vanguard Brokerage account, usually in December. These download as Dividends but with a Memo that says what the actual distribution type is. In this case, you should edit the downloaded transaction to set the correct type.

    I edited your first post to correct the Ticker to VMFXX

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