Vanguard Admiral Minimums

yogibearbull

VG sent notices to bring up VG Admiral balances to minimum by mid-November (i.e. within 2 months), or those may be downgraded to Investor shares. Both being IRA a/c, it may be possible to shift $s in one, but not in the other.

I don't recall similar notices in the past. Of course, the initial purchases for Admiral always required $minimum, but then VG didn't care about the minimums if the a/c were "large" enough. May be VG is getting strict on this, or its definition of "large" has been revised internally.

msf

It may depend on the fund. I had two VG Admiral funds that dipped below their min balance requirements (market movement) around the same time. VG converted one (a popular fund) back to Investor shares; the other one it ignored.

I don't recall whether I got a notice. Since Vanguard is a stickler on procedure it's a reasonable assumption that if notification was required, VG sent it to me. The point is that actually downgrading is not something new, but enforcement may seem random.

Derf

Assumed at one time if you invested minimum $$ & then Mr. Market dropped the fund below minimum, your butt was covered . I guess that is no longer in effect.
Nothing in my mail box as of 10:11 CST today.

msf

It's usually better (safer) to Read The Fine Manual (prospectus). Sample from VPMCX / VPMAX prospectus, Jan 25, 2008:

MANDATORY CONVERSIONS TO INVESTOR SHARES
If an account no longer meets the balance requirements for Admiral Shares, Vanguard may automatically convert the shares in the account to Investor Shares. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.

https://www.sec.gov/Archives/edgar/data/752177/000093247108000022/chester_485b.txt

The identical wording (though with more modern typeset) appears in the current prospectus.
https://personal.vanguard.com/pub/Pdf/p059.pdf?2210168823

Note that Vanguard "may", not "will". This is consistent with my experience.

sma3

Sometimes you can get them to work with you. Years ago my wife had over $3000 in a growth fund that badly underperformed both the market and it's peers, to the point she was below the $3000 minimum for any stock fund.

I got the rep to allow us to buy a more reasonable alternative, since it was Vanguard's fault the account was so low.

Dave

Vanguard has been pulling some funny stunts lately. Maybe a change in internal management policies?

I had check writing account on one of their MMFunds. I wrote a check. They bounced it. The agent: The checking account was closed as DORMANT after 12 months with no check writing...

Huh? Plenty of money in the MMFund.

And I had to pay (reimburse the payee) the banks Bounced Check fee.

Vanguards response: Nothing.

And the new 'Avoid Account Fees' policy: It's now $5Million for mailed statements.

Sigh.

msf

Accounts at financial institutions are considered to be inactive if there has been no activity (aside from automatic divs/interest/CD renewals) for some period of time, often 12 months.

The institution continues to hold your assets, though it may "close" the account, or it may prohibit all transactions (including cashing checks), or it may simply start charging inactivity fees. (Vanguard does not charge inactivity fees.)

There is some confusion about the term "dormancy". Some institutions say that an inactive account is "dormant". That is how Vanguard is using the term according to your post. Others wait until the next phase (below) before calling the account dormant.

A financial institution is required to turn over ("escheat") account assets to your state after some longer period of time. Depending on the state, this is three years or longer. Some institutions say that this is when an account becomes "dormant". Vanguard uses "dormancy" this way in its prospectuses, e.g. for VMFXX:

Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be
required to transfer [escheat] it to a state under the state’s abandoned property law,
subject to potential federal or state withholding taxes.

https://personal.vanguard.com/pub/Pdf/p030.pdf?2210171184

Until the assets escheat, you can recover inactive account assets by notifying the institution (Vanguard) that you are still alive, still interested in the assets, and go about reactivating the account (or possibly opening a new account).

Note that the rules are more forgiving for retirement accounts. It's a mess that I'm not going to sift through now.
https://news.bloombergtax.com/daily-tax-report/faqs-on-unclaimed-property-aspects-of-retirement-assets

Once burned, twice shy. Wells Fargo did this to me several years ago. Ever since then I've kept a log of the last time I contacted the institution (and what constitutes "contact") or conducted a transaction. When it gets close to a year (even if the institution says it doesn't care about inactivity, just escheatment), I will contact the institution. Or make a $5 deposit, or something.

yogibearbull

I wrote to Vanguard for temporary waiver for Admiral min of $50K. I cited bad 3-yr stretch for hybrids & that new money cannot be added to IRAs in retirement (only earnings from work can be contributed).

Vanguard's reply, after several days, was that it is looking into the matter.

If Vanguard's final response is negative, I will just SELL those Admiral hybrids (under $50K) ahead of Investor-conversion deadline and replace them with appropriate combo of TCAF + USFR. In the bigger scheme of things, the ER change doesn't matter. But Vanguard needs to have some pushbacks. After Vanguard forced conversion to brokerage, I am not limited to Vanguard funds.