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Posted by Ken and Jane Becker on May 12, 2008, 11:19 pm
Please log in for more thread options Don R wrote:
> Don R wrote:
>> Vanguard says I can convert my investor shares to admiral shares and
>> get a lower expense ratio. In Quicken 2007 Premier would this be
>> handled as a corporate name change? The account is hooked up to
>> Vanguard via Quicken direct connect. TIA
>>
>> Don
>
> I feel like I'm talking to myself, but just in case no one knew the
> answer to my question or you were afraid to offer advice, here's what
> Vanguard had to say.
>
> Vanguard Says:
>
> When we converted your Investor Shares to Admiral Shares, Vanguard
> treats the conversion as a non-taxable event. Subsequently, there will
> be no capital gains or losses associated with the fund conversion.
>
> If you choose to download the transactions, they?ll automatically appear
> in the associated accounts, depending on how you track your Vanguard
> accounts in Quicken. If you track your accounts by the account number
> only, it will appear as a new fund in the account and Quicken will
> prompt you to add it to the security list. If you track your accounts by
> fund and account number, you?ll have to create a new account in Quicken
> to track the newly created Admiral Shares account. Your Investor Share
> account balance will be reduced to zero.
>
> If you choose to manually enter the conversion, please enter it as shown
> below.
>
> Quicken doesn't currently contain a specific investment transaction for
> share class conversions, but the Corporate Acquisition (stock for stock)
> transaction will handle a class conversion. The corporate acquisition
> will maintain an accurate cost basis for the new share class.
>
> 1. Open the account in question and click Enter Transactions.
> 2. In the Enter Transaction drop down menu, choose Corporate Acquisition
> (stock for stock).
> 3. Complete the form using the following information:
> a. Company Acquired - Enter your original share class.
> b. Acquiring Company - Enter your new share class.
> c. New Shares Issued Per Old Share - Enter the number of new share
> class shares received for each original share class share. If you are
> unsure of the number to enter here, please check your Transaction
> History online, or reply to this message. Please specify the date, fund,
> and account number for your Admiral conversion.
> d. Price Per Share for Acquiring Company - Enter the closing price of
> the new share class on the date of conversion.
> 4. Click Enter/Done.
>
> The Quicken forum also offers advice on this subject.
>
>
>
Don,
As described above, that's exactly right - it's a corporate acquisition.
Done correctly Quicken will properly figure that there's no tax
implications.
Now, as Mr. Pollard correctly points out, Quicken will exchange all the
Investor Shares for Admiral Shares. This works out just fine if you have
but one Quicken account that has the Investor Shares. However, if you
have multiple Vanguard accounts (IRA, 401K, one in your spouse's name,
etc.) that don't have any such conversion going on, you'll find that
those accounts got converted, too.
The solution, while a taking a little time, is simple: After the
exchange is performed, go to the accounts where the exchange shouldn't
have happened and delete the extra transactions.
You're welcome.
Oh, yeah: The Admiral shares are cool, you get a slightly better rate of
return on them. However, if you end up violating the terms of the
Admiral shares (less invested in them because of shifting things around,
etc.), they'll end up being involuntarily exchanged to Investor shares
again.
In this case, you do another corporate acquisition, but this time in the
opposite direction. That works, too.
Been there, done that, got the tee shirts.
Good luck.
Ken Becker
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