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How do I do a conversion on a fund that converts to the same named fund in my IRA?

Sannp

I have Vanguard Admiral fund in my IRA and a Vanguard Investor fund outside of the IRA. Recently the Investor fund was converted to Admiral. I tried converting the Investor fund, but it screwed up the Admiral fund in the IRA. I tried adding an Admiral fund to the account I maintain for Vanguard funds outside my IRA and it wasn't allowed. How can I do this?

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NotACPA

Which Q product are you running? In B&P, there's a "Mutual Fund Conversion" action … but I don't know if that exists in lower level products.

Also, how did you do that conversion? And in what way did it screw up the fund in the IRA?

Also, you shouldn't need both an "IRA Admiral Fund" and a "Non-IRA Admiral Fund". It's one fund, the tax status of the 2 accounts (IRA vs non) will handle the tax differences of actions in the respective accounts.

mnml0

Conversion from Investor to Admiral shares is a class change, so the two funds should have different symbols/CUSIPs, right?

Sannp

To clarify…The Wellington Admiral account was part of my 401-k which I changed to a Vanguard IRA when I retired in 1998. Much later on, I invested in a Wellington Investor fund. Over the years reinvestment of dividends in that fund accumulated so that recently it went over the line and was converted to Admiral. This fund is part of an account I call Individual Account with other funds that are outside of the IRA. The IRA is in an account I call IRA which holds 4 Vanguard funds. The balances of these 2 Wellington funds are vastly different. I don't know what happened when I entered the Individual Account and used the conversion option to convert. I was very pleased by what was done until I looked at the IRA Admiral account where it had done I don't know what, but it showed the account having a loss of over $100,000 dollars. Thankfully I had a backup. I couldn't find any way to lock that Investor fund to the Individual Account and ignoring the IRA Account where it had no business.

Jim_Harman

Let's make sure we are using Quicken terminology here, not mixing up "securities," "funds," and "accounts".

It sounds like you have two Accounts in Quicken, Individual and IRA. There are corresponding accounts at Vanguard. Each of these accounts holds several securities. One of the securities in the Individual account was the Wellington Investor fund VWELX, currently at about $49 per share. This went through a Share Class Conversion to the Wellington Admiral fund VWENX, currently at about $84 per share. You already held the Wellington Admiral fund in the IRA account.

Assuming I have that right, the Share Class conversion should have entered one Removed transaction in the Individual account for all the Investor shares and one Added transaction of Admiral shares in that account for each tax lot the Investor shares. The total value of the Individual account should not have changed significantly. The IRA account should not have been affected, either in the number of shares of the Admiral fund or in the price per share.

You say the IRA account value changed by over $100,000. My guess is that you entered the wrong share price for the Admiral fund when you entered the Share Class Conversion. Go to the IRA account and click on Holdings. Set the As of date to just before the conversion. Check how many shares of the Admiral fund are there, and the share price. Now set the As of date to the conversion date. The number of shares and the price should not have changed significantly.

If you go to the Individual account, and check the holdings before and after the conversion, you should see the Wellington Investor shares disappear and a smaller number of Admiral shares appear with a higher share price. The total value of the Wellington holding should remain about the same.

Let us know what you see and we can give instructions on how to fix any issues.

Sannp

You understand correctly about my Quicken defined accounts. It did as you say when it converted the Individual Investor Fund and I was happy about that. But there was also an in and out for every share of the IRA Admiral Fund and that shouldn't have been touched at all. I didn't look closely at exactly what was done to the IRA Admiral Fund, but just quickly restored back to the way the accounts were before the conversion. What alerted me to the fact that something had happened was suddenly this gross loss in red in the Gain/Loss column of the IRA which alarmed me.

Jim_Harman

If you don't know exactly what happened in the IRA account, it is hard to say how to make the conversion work correctly.

One thing to check: Go to Tools > Security List and click on the Wellington Investor fund to open the Security Detail view, then click on Edit details.

Is the Type Mutual Fund?

Below the Asset Class box, is there a Use average cost box and is it checked?

Due to a bug in the Share class conversion, the Use average cost box must be un-checked in order for the cost basis to be computed correctly.

Sannp

I felt that the conversion result of the Wellington Investor fund in my Individual Investor account went fine. My problem is that the original Wellington Admiral fund within the IRA account was altered with many in/outs as well, with its negative Gain/Loss number showing over $100,000 in the red. This fund in the IRA should not have been touched at all.

I will look at the Use avg. cost box for the Investor fund. But I don't know how this relates to the changes to the older Wellington Admiral within my IRA account. I will do a retry when I have a free day to spend on it and note more details of what happened. I appreciate the attention you have given to my problem.

All account names I have used are what I defined them as in Quicken. At Vanguard the funds outside of the IRA are in what they call my Brokerage account.