[USER]

What consequences should I be aware of if I move from VTSAX to VTI the following:

$140k inside a brokerage account
$450k inside a traditional IRA

Thanks!

[Rick]

Well you would have to sell the fund end of day so I expect the money is not available until after market close meaning you could not buy until next market open.

And well….lately markets can move a little overnight. So, you have that risk.

Once you do the transition, you would have the ability to buy/sell during the market open time anytime in the future. You can set limit orders.

While I am not advocating trading per se, this stuff is helpful when you want to rebalance or tax loss harvest. It just gives you greater control.

Otherwise for traditional Ira I don’t think you have much else.
I don’t know this for sure but I thought I read vanguard is offering a move from fund to etf in an easy one click manner and maybe just maybe without tax implications.

But don’t take my word on that and research further.

If you have it at vanguard and this is indeed something legit, it would negate the otherwise tax gains/losses your would incur with this move in your taxable brokerage account.

Aka this could be a big deal.

[Jule]

I’d not bother as they are very similar in that they track the entire stock market. The holdings are nearly identical.

One is an ETF (better further brokerage accounts) and the other one is a mutual fund (better for retirement accounts).

I’d leave it where it is and if necessary just reallocate future contributions.

[Chris]

I have done VTSAX to VTI conversion before and there are no tax consequences. There is no selling of shares or anything like that.

Just give them a call and they can do it in a few minutes.

The expense ratio of VTI is slightly lower but it is the same exact investment

[Frank]

None. In fact, you can do a direct conversion because they are actually part of the same general fund.

Call Vanguard and have them do it.

[Sean]

Not sure why you’d want to do this as they are basically the same and have identical returns. But I’ll add some information to help you make the decision based on some incorrect things I’m reading in the comments.

Many people suggest the ETFs are generically more tax efficient than mutual funds.

In your ira this does not matter. But vanguard mutual funds have the exact same tax efficiency as their corresponding ETFs so the tax efficiency of vtsax is already the same as VTI, so no concern there.

This is not currently true of funds from other brokerages.

Second, if you decided to sell funds within your ira there will be no tax consequences so again it doesn’t matter there.

BUT at vanguard you can actually change from the mutual fund to the etf directly without having to sell or incur any tax consequences.

You may have to call them and ask them how to do that, or you may be able to find it on Google. So again in this case it doesn’t matter at all.

Note that it’s only one way, mutual funds to etf not the reverse.

[Webber]

I discovered, too late, that once I moved from index funds to ETFs Vanguard is no longer able to automate monthly withdrawals, ie RMDs.

[Alan]

As others have stated, both funds are the same underneath, so you have to be clear why you want to change. For me, VTI is preferable because of the flexibility to change the broker if the situation arises in future.

Another possible reason (not important for me) is the ability to trade intra-day.

However, if you are sure to keep your money with Vanguard essentially forever, and have no interest in intra-day trading, there is no real need to change.

[Eric]

I’m surprised no one has mentioned the “wash sale” rule.
If you sell one asset and buy a reasonably same asset within 30 days, that’s called a wash sale.

A wash sale has tax penalties.

[Poley]

Unless you are leaving vanguard, no need to convert it’s the same thing.

Just note it’s a one way conversation so can’t convert back to VTSAX without creating a taxable even in regular brokerage.

IRA sells aren’t taxed.

[Chris]

No change in your tIRA but this is a taxible event in your Brokerage account. Your profit/loss (short term/long term) is taxed. Buying VTI doesn’t offset but creates a new cost basis.

Can be dangerous if you take a loss on VTSAX and immediately buy VTI.

IRS has the potential to flag the loss and then purchase since they are extremely similar.

Best if you are taking a profit on VTSAX and then purchasing VTI right after.

The IRS gets their cut of you making a profit at the end of the year in taxes. (Tax gain harvesting)

[Author]

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