Vanguard PrimeCap -- rules for adding to account?

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water2357
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Vanguard PrimeCap -- rules for adding to account?

Post by water2357 »

In the PrimeCap prospectus it states that if you already own PrimeCap you can purchase up to $25,000 additional each year.

1) Is that still the current rule?

2) If you own it in an IRA, can you only purchase it in the IRA?

3) Or will Vanguard let you purchase it outside the IRA as long as your total purchases for the year are less than $25,000 both inside the IRA and out?
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anon_investor
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by anon_investor »

water2357 wrote: Sat Apr 24, 2021 6:57 pm In the PrimeCap prospectus it states that if you already own PrimeCap you can purchase up to $25,000 additional each year.

1) Is that still the current rule?

2) If you own it in an IRA, can you only purchase it in the IRA?

3) Or will Vanguard let you purchase it outside the IRA as long as your total purchases for the year are less than $25,000 both inside the IRA and out?
I believe it is $25k per account where you already own it. E.g. if you own it in your Roth IRA you can buy $25k there, and if you own it in your Traditional IRA you can also buy $25k there, for $50k combined.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by RickBoglehead »

If you own Primecap, you can buy $25k per account type you own, whether that account has Primecap or not.

Husband and wife:

His individual brokerage acct
Her individual brokerage acct
His Roth IRA
Her Roth IRA
His Traditional IRA
Her Traditional IRA
Joint account
His Rollover IRA
Her Rollover IRA

That's 9 x $25k per year.

Caveat: That's for a Flagship customer. May be different for non-Flagship owner?

Edit - yes, pretty clear in prospectus. Non-Flagship cannot open new account, just invest more in existing account that owns Primecap.
Last edited by RickBoglehead on Sat Apr 24, 2021 7:19 pm, edited 1 time in total.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

It is only in the account in which it is held and $25k per that account...
I went through this last year trying to switch positions in a an IRA into a Roth.
You can call in and close out the position to transfer it into another account but if you only had it one account you can only have one position of it.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by retire2022 »

Op

One needs flagship status in order to get the closed funds in a Vanguard account, which means one needs $1 Million worth of assets for that to kick in.

If you have a 401k plan which could have an agreement with Vanguard it may work, my 457b state plan carries VPMAX, and I have 4105.1924 shares of it.

It is overrated and not always the best investment, you could do better going with VFIAX/VOO with VGT.

It is not good to have it in taxable account since they give lots of dividends.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

RickBoglehead wrote: Sat Apr 24, 2021 7:13 pm If you own Primecap, you can buy $25k per account type you own, whether that account has Primecap or not.

Husband and wife:

His individual brokerage acct
Her individual brokerage acct
His Roth IRA
Her Roth IRA
His Traditional IRA
Her Traditional IRA
Joint account
His Rollover IRA
Her Rollover IRA

That's 9 x $25k per year.

Caveat: That's for a Flagship customer. May be different for non-Flagship owner?
Are you thinking it works that way, or are you speaking from experience?
That is not how it worked out for me even as an Admiral funds holder, albeit non-flagship ( Voyager Select)
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by RickBoglehead »

AznSaver wrote: Sat Apr 24, 2021 7:19 pm
RickBoglehead wrote: Sat Apr 24, 2021 7:13 pm If you own Primecap, you can buy $25k per account type you own, whether that account has Primecap or not.

Husband and wife:

His individual brokerage acct
Her individual brokerage acct
His Roth IRA
Her Roth IRA
His Traditional IRA
Her Traditional IRA
Joint account
His Rollover IRA
Her Rollover IRA

That's 9 x $25k per year.

Caveat: That's for a Flagship customer. May be different for non-Flagship owner?
Are you thinking it works that way, or are you speaking from experience?
That is not how it worked out for me even as an Admiral funds holder, albeit non-flagship ( Voyager Select)
Done it. Multiple times.
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water2357
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by water2357 »

This is not Flagship. This is just one account in a traditional IRA. So, it sounds like you can only then purchase an additional $25,000 in that traditional IRA. Or you can possibly have those Primecap shares direct transferred to a ROTH IRA as a conversion and then buy the additional $25,000 in the ROTH.

Bottom line it sounds like you can only buy $25,000 per year (nonFlagship) and it has to be in the account that is holding the Primecap shares at the time of the purchase.

Is that correct?
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

RickBoglehead wrote: Sat Apr 24, 2021 7:21 pm Done it. Multiple times.
Thanks for the clarification. I guess the money makes a difference, I better keep saving :D
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

water2357 wrote: Sat Apr 24, 2021 7:24 pm This is not Flagship. This is just one account in a traditional IRA. So, it sounds like you can only then purchase an additional $25,000 in that traditional IRA. Or you can possibly have those Primecap shares direct transferred to a ROTH IRA as a conversion and then buy the additional $25,000 in the ROTH.

Bottom line it sounds like you can only buy $25,000 per year (nonFlagship) and it has to be in the account that is holding the Primecap shares at the time of the purchase.

Is that correct?
That is correct, however you can transfer it to another account, but the previous position in the old account has to be closed, you have to call in prior to closing the position to have them transfer it... I wanted to switch my position in my IRA to my Roth.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by retire2022 »

water2357 wrote: Sat Apr 24, 2021 7:24 pm This is not Flagship. This is just one account in a traditional IRA. So, it sounds like you can only then purchase an additional $25,000 in that traditional IRA. Or you can possibly have those Primecap shares direct transferred to a ROTH IRA as a conversion and then buy the additional $25,000 in the ROTH.

Bottom line it sounds like you can only buy $25,000 per year (nonFlagship) and it has to be in the account that is holding the Primecap shares at the time of the purchase.

Is that correct?
My friend did not have a flagship account, but have has PrimeCap in her IRA but she was not allowed to purchase additional shares in her taxable brokerage account in any amount, several calls to customer service and to no avail.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by water2357 »

Thanks, nonFlagship I figured the limit would be just the $25,000 but wasn't sure if I could somehow get the shares into a different type of account. At least, if it makes sense to do so, the shares could all be moved to a ROTH with any additional shares then purchased in the ROTH and there would no longer be any shares in the traditional IRA.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by RickBoglehead »

If you had Primecap in a traditional IRA, you could do a Roth conversion in kind of a small amount, then buy more in both accounts up to the annual per account limit, I suspect.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by ResearchMed »

AznSaver wrote: Sat Apr 24, 2021 7:29 pm
water2357 wrote: Sat Apr 24, 2021 7:24 pm This is not Flagship. This is just one account in a traditional IRA. So, it sounds like you can only then purchase an additional $25,000 in that traditional IRA. Or you can possibly have those Primecap shares direct transferred to a ROTH IRA as a conversion and then buy the additional $25,000 in the ROTH.

Bottom line it sounds like you can only buy $25,000 per year (nonFlagship) and it has to be in the account that is holding the Primecap shares at the time of the purchase.

Is that correct?
That is correct, however you can transfer it to another account, but the previous position in the old account has to be closed, you have to call in prior to closing the position to have them transfer it... I wanted to switch my position in my IRA to my Roth.
Does this mean you can't roll *some* Primecap from an IRA in kind to a taxable account?
If you can (and are old enough withdraw from IRA, etc.), then if you can move some but not all, you'd have some in the IRA and some in a taxable account.

And if the goal is to maximize the amount of Primecap held, then pay the taxes from another source so that you aren't using up any Primecap while you try to add the max $25k to each account.

I haven't done this at Vanguard, so I'm not sure if they allow a transfer in kind from an IRA to taxable.
(Apparently one can't transfer in kind from a 403b - or at least couldn't at Vanguard in our 403b plan - but at Schwab, it was simple to transfer in kind from IRA to taxable.)

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Re: Vanguard PrimeCap -- rules for adding to account?

Post by anon_investor »

ResearchMed wrote: Sat Apr 24, 2021 7:44 pm
AznSaver wrote: Sat Apr 24, 2021 7:29 pm
water2357 wrote: Sat Apr 24, 2021 7:24 pm This is not Flagship. This is just one account in a traditional IRA. So, it sounds like you can only then purchase an additional $25,000 in that traditional IRA. Or you can possibly have those Primecap shares direct transferred to a ROTH IRA as a conversion and then buy the additional $25,000 in the ROTH.

Bottom line it sounds like you can only buy $25,000 per year (nonFlagship) and it has to be in the account that is holding the Primecap shares at the time of the purchase.

Is that correct?
That is correct, however you can transfer it to another account, but the previous position in the old account has to be closed, you have to call in prior to closing the position to have them transfer it... I wanted to switch my position in my IRA to my Roth.
Does this mean you can't roll *some* Primecap from an IRA in kind to a taxable account?
If you can (and are old enough withdraw from IRA, etc.), then if you can move some but not all, you'd have some in the IRA and some in a taxable account.

And if the goal is to maximize the amount of Primecap held, then pay the taxes from another source so that you aren't using up any Primecap while you try to add the max $25k to each account.

I haven't done this at Vanguard, so I'm not sure if they allow a transfer in kind from an IRA to taxable.
(Apparently one can't transfer in kind from a 403b - or at least couldn't at Vanguard in our 403b plan - but at Schwab, it was simple to transfer in kind from IRA to taxable.)

RM
If Flagship status, you can just outright buy $25k/yr in all accounts.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

ResearchMed wrote: Sat Apr 24, 2021 7:44 pm Does this mean you can't roll *some* Primecap from an IRA in kind to a taxable account?
If you can (and are old enough withdraw from IRA, etc.), then if you can move some but not all, you'd have some in the IRA and some in a taxable account.

And if the goal is to maximize the amount of Primecap held, then pay the taxes from another source so that you aren't using up any Primecap while you try to add the max $25k to each account.

I haven't done this at Vanguard, so I'm not sure if they allow a transfer in kind from an IRA to taxable.
(Apparently one can't transfer in kind from a 403b - or at least couldn't at Vanguard in our 403b plan - but at Schwab, it was simple to transfer in kind from IRA to taxable.)

RM
That is correct, you CANNOT roll Primecap into another account... You can transferred it by calling into customer service an closing out your position in one account and having it in another subject to contribution limits if using new money or whatever amount that was held with existing funds...
i.e. If in one account, you can only have one with it... hope that makes sense.

This is the non-flagship version of doing things as I do not have flagship.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by water2357 »

For Flagship status don't you have to have a $1 million all in Vanguard investments which would just be Vanguard mutual funds and Vanguard ETFs?

So, Vanguard doesn't count e.g. shares of stock or bonds held directly in your brokerage account, correct?

And I'm not sure if for Flagship, Vanguard counts the Vanguard investments of others in the same household?

So, Flagship may not currently be an option, so was just assuming nonFlagship for now.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by RickBoglehead »

water2357 wrote: Sat Apr 24, 2021 7:58 pm For Flagship status don't you have to have a $1 million all in Vanguard investments which would just be Vanguard mutual funds and Vanguard ETFs?

So, Vanguard doesn't count e.g. shares of stock or bonds held directly in your brokerage account, correct?

And I'm not sure if for Flagship, Vanguard counts the Vanguard investments of others in the same household?

So, Flagship may not currently be an option, so was just assuming nonFlagship for now.
Everyone at same address.

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Re: Vanguard PrimeCap -- rules for adding to account?

Post by ruud »

What's so special about PrimeCap?
.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by celia »

RickBoglehead wrote: Sat Apr 24, 2021 7:13 pm Husband and wife:

His individual brokerage acct
Her individual brokerage acct
His Roth IRA
Her Roth IRA
His Traditional IRA
Her Traditional IRA
Joint account
His Rollover IRA
Her Rollover IRA

That's 9 x $25k per year.
plus:
His Inherited Roth IRA from person1
Her Inherited Roth IRA from person1
His Inherited Traditional IRA from person1
Her Inherited Traditional IRA from person1
repeat for persons 2, 3, 4, etc depending on how many rich relatives you used to have...

Also Trust 1, Trust 2, etc.
HSA?
SEP IRA
SIMPLE IRA?

Use some imagination, here ....
RickBoglehead wrote: Sat Apr 24, 2021 7:13 pm Edit - yes, pretty clear in prospectus. Non-Flagship cannot open new account, just invest more in existing account that owns Primecap.
Are you sure the prospectus says that? I think anyone can buy as much as they want when the fund isn't "CLOSED".
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by celia »

AznSaver wrote: Sat Apr 24, 2021 7:14 pm It is only in the account in which it is held and $25k per that account...
I went through this last year trying to switch positions in a an IRA into a Roth.
You can call in and close out the position to transfer it into another account but if you only had it one account you can only have one position of it.
Are you saying you can't convert $25k in-kind from tax-deferred to Roth?
You can't withdraw $25k in-kind from tax-deferred to Taxable?

Of course, you would need to move at least the minimum needed to get into the fund, which isn't available for PrimeCap, at the moment, since it is CLOSED. I think I asked once and that was the "problem".
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

celia wrote: Sat Apr 24, 2021 9:46 pm
AznSaver wrote: Sat Apr 24, 2021 7:14 pm It is only in the account in which it is held and $25k per that account...
I went through this last year trying to switch positions in a an IRA into a Roth.
You can call in and close out the position to transfer it into another account but if you only had it one account you can only have one position of it.
Are you saying you can't convert $25k in-kind from tax-deferred to Roth?
You can't withdraw $25k in-kind from tax-deferred to Taxable?

Of course, you would need to move at least the minimum needed to get into the fund, which isn't available for PrimeCap, at the moment, since it is CLOSED. I think I asked once and that was the "problem".
Yes you cannot... An in-kind transfer to an account that does not contain that position will not go through, a transfer of owned shares doesn't effect the $25k yearly limit.

It is closed to new investors, the fund itself is not closed. People, like myself, that currently hold positions in the fund can still make purchases in the fund. Those additional purchases are capped at $25k per a year in each account that holds that position. If you have it in a IRA and Roth you can purchase $25k in each account for a total of $50k. If only in an IRA then $25k only and only in the IRA, same thing if only in Roth.

You cannot do any in-kind conversions of the fund that would create shares in an account that did not hold the position.
If you have PrimeCap in your IRA and do not have it in your Roth the system will not let you purchase it in your Roth account, only your IRA.

If you want it transfer the funds from one account to another you have to call in and have them close the position entirely in one account and then repurchase it in the other account if you did not have it in that account... This transfer does not have a cap on the amount as you are only repurchasing the same amount, whatever that was, from the other account...
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

ruud wrote: Sat Apr 24, 2021 8:52 pm What's so special about PrimeCap?
There really isn't anything special about it... It's an active fund at Vanguard managed by the PrimeCap advisor group, a company outside vanguard.
It's a US large cap growth fund that has good performance. It's benchmark is the s&p500, however it is not an index and at times has beaten the s&p500. It only contains 168ish stocks and has a 6-8% turnover, i.e. not great for taxable account as it throws out quite a bit of capital gains and some dividends each year.

It is closed to new investors... I've been told the closure was due to trying maintain the funds overall size.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by ResearchMed »

AznSaver wrote: Sat Apr 24, 2021 10:34 pm
ruud wrote: Sat Apr 24, 2021 8:52 pm What's so special about PrimeCap?
There really isn't anything special about it... It's an active fund at Vanguard managed by the PrimeCap advisor group, a company outside vanguard.
It's a US large cap growth fund that has good performance. It's benchmark is the s&p500, however it is not an index and at times has beaten the s&p500. It only contains 168ish stocks and has a 6-8% turnover, i.e. not great for taxable account as it throws out quite a bit of capital gains and some dividends each year.

It is closed to new investors... I've been told the closure was due to trying maintain the funds overall size.
PRIMECAP itself is a mutual fund family (PRIMECAP Odyssey Funds), and they have a few mutual funds "of their own", in addition to the few they offer through Vanguard.

One of them is POAGX, which is also closed, or was last I checked. That opens occasionally for new investors. There is no cap on annual contributions once one has a position in any of their other funds.
As with some other active funds, it can have periods of outperformance, until... it doesn't...

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Re: Vanguard PrimeCap -- rules for adding to account?

Post by Yesterdaysnews »

PrimeCap hasn’t performed well for years. I see no reason to jump through hoops to purchase it.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by AznSaver »

Yesterdaysnews wrote: Sat Apr 24, 2021 11:11 pm PrimeCap hasn’t performed well for years. I see no reason to jump through hoops to purchase it.
How are you quantifying that?
Returns / 3mo / ytd / 1 yr / 3yr / 5yr / 10 year / Full
VPMCX 10.05% / 10.05% / 61.63% / 16.72% / 18.75% / 15.53% / 13.45%
VFINX 6.15% / 6.15% / 56.19% / 16.63% / 16.14% / 13.75% / 10.19% (Vanguard S&P 500)

It's doing and has done quite well trading blows with it's benchmark.
If it was a hassle to obtain it I can see choosing an alterative, but not an issue for those currently in the fund.
I see no reason currently to leave it for alternatives at this stage in my accumulation.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by sperry8 »

What happens in the case where we set the system to reinvest annual dividends & Cap Gains into PRIMECAP and the dividend payout is >$25k? Do they just invest $25k into PRIMECAP and issue the remainder as cash?
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by sycamore »

sperry8 wrote: Tue Oct 04, 2022 5:14 am What happens in the case where we set the system to reinvest annual dividends & Cap Gains into PRIMECAP and the dividend payout is >$25k? Do they just invest $25k into PRIMECAP and issue the remainder as cash?
Look in the prospectus.
Limits on Additional Investments
Current PRIMECAP Fund shareholders may invest up to $25,000 per Fund
account per year in the Fund. The $25,000 limit includes the total amount
invested during any calendar year in each Fund account. Dividend and capital
gains reinvestments do not count toward the $25,000 annual limit.
I underlined the relevant part.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by sperry8 »

sycamore wrote: Tue Oct 04, 2022 7:22 am
sperry8 wrote: Tue Oct 04, 2022 5:14 am What happens in the case where we set the system to reinvest annual dividends & Cap Gains into PRIMECAP and the dividend payout is >$25k? Do they just invest $25k into PRIMECAP and issue the remainder as cash?
Look in the prospectus.
Limits on Additional Investments
Current PRIMECAP Fund shareholders may invest up to $25,000 per Fund
account per year in the Fund. The $25,000 limit includes the total amount
invested during any calendar year in each Fund account. Dividend and capital
gains reinvestments do not count toward the $25,000 annual limit.
I underlined the relevant part.
ah great, thanks!
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by informal guide »

Fortunately, Roth conversions and transfers by Vanguard at the death of an investor are not limited by the $25K rule either.
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Re: Vanguard PrimeCap -- rules for adding to account?

Post by retire2022 »

Yesterdaysnews wrote: Sat Apr 24, 2021 11:11 pm PrimeCap hasn’t performed well for years. I see no reason to jump through hoops to purchase it.
Additionally having owned it in tax deferred account, its dividend and capital gains payout is higher than VOO/VTI and it best not to select them in a taxable account as it is tax inefficient.

My account is currently 2.0 million since consolidating everything at Vanguard last August 2021 and they are not recognizing Flagship status and cannot buy closed funds.
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