VUSXX vs VMFXX questions

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hudson4351
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VUSXX vs VMFXX questions

Post by hudson4351 »

I've been reading discussions on the forums related to these two funds and have two questions that I haven't been able to find answers to:

1. If I live in a state with no income tax, is there any reason to prefer one of these funds over the other?

2. Is one of these funds technically safer than the other? For reference, here is the description of VUSXX:
This fund at a minimum invests 80% of the assets in debt issued directly by the government in the form of Treasury bills and in repurchase agreements fully collateralized by U.S. Treasury securities. As a government money market fund, this fund is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities).
Here is the description of VMFXX:
The fund invests at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash (collectively, government securities).
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Artsdoctor
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Re: VUSXX vs VMFXX questions

Post by Artsdoctor »

The higher your state's income tax is, the more beneficial VUSXX becomes. If your state has no income tax, VUSXX is unlikely to offer a superior after-tax yield for you. Recently, VUSXX's yield has been higher than the yield of VMFXX although this is not always the case. VMFXX has the benefit of being the default settlement fund which makes it more convenient to own (depending on your needs). I wouldn't be concerned about safety since both funds should provide excellent liquidity.
peteyboy
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Re: VUSXX vs VMFXX questions

Post by peteyboy »

Check out the linked spreadsheet below for data and a graph on VUSXX vs VMFXX yield over the last year.

https://docs.google.com/spreadsheets/d/ ... 1074987830
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goodenyou
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Re: VUSXX vs VMFXX questions

Post by goodenyou »

Looks like the SEC yield is:

VUSXX 4.66%
VMFXX 4.65%

as of 3/24/2023

There are other threads on the differences/pros/cons. Doesn't look like much of a difference. I use VMFXX as a sweep account and it is linked to my bank. Apparently, you can do same/similar with VUSXX. I don't think the risk is any different between the funds. Theoretically yes, practically no, IMO.
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tibbitts
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Re: VUSXX vs VMFXX questions

Post by tibbitts »

I recently exchanged most of my VMFXX for VUSXX and now, especially with knowing about the reduced state income tax exemption, kind of wish I hadn't. With funds in the $50k - $100k range it doesn't matter much; just another thing to deal with. I don't think there's any practical difference in risk.
candb
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Re: VUSXX vs VMFXX questions

Post by candb »

tibbitts wrote: Mon Mar 27, 2023 11:56 am I recently exchanged most of my VMFXX for VUSXX and now, especially with knowing about the reduced state income tax exemption, kind of wish I hadn't. With funds in the $50k - $100k range it doesn't matter much; just another thing to deal with. I don't think there's any practical difference in risk.
I recently did the same in taxable accounts. What do you mean by "the reduced state income tax exemption"?
tibbitts
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Re: VUSXX vs VMFXX questions

Post by tibbitts »

candb wrote: Mon Mar 27, 2023 12:57 pm
tibbitts wrote: Mon Mar 27, 2023 11:56 am I recently exchanged most of my VMFXX for VUSXX and now, especially with knowing about the reduced state income tax exemption, kind of wish I hadn't. With funds in the $50k - $100k range it doesn't matter much; just another thing to deal with. I don't think there's any practical difference in risk.
I recently did the same in taxable accounts. What do you mean by "the reduced state income tax exemption"?
That VUSXX is apparently no longer completely state income tax exempt. And yes I only changed to VUSXX in taxable accounts.
peteyboy
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Re: VUSXX vs VMFXX questions

Post by peteyboy »

tibbitts wrote: Mon Mar 27, 2023 1:47 pm
candb wrote: Mon Mar 27, 2023 12:57 pm
tibbitts wrote: Mon Mar 27, 2023 11:56 am I recently exchanged most of my VMFXX for VUSXX and now, especially with knowing about the reduced state income tax exemption, kind of wish I hadn't. With funds in the $50k - $100k range it doesn't matter much; just another thing to deal with. I don't think there's any practical difference in risk.
I recently did the same in taxable accounts. What do you mean by "the reduced state income tax exemption"?
That VUSXX is apparently no longer completely state income tax exempt. And yes I only changed to VUSXX in taxable accounts.
We will know the full effect that the repurchasing agreements will have on the 2023 tax situation when Vanguard provides those details in Jan 2024. By way of example, linked below is the 2022 details provided at the start of 2023.
https://personal.vanguard.com/pdf/USGOIN_01_2022.pdf
https://www.vanguard.com/pdf/USGOIN_2023.pdf
donotgiveup
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Re: VUSXX vs VMFXX questions

Post by donotgiveup »

I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
tibbitts
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Re: VUSXX vs VMFXX questions

Post by tibbitts »

donotgiveup wrote: Mon Mar 27, 2023 7:18 pm I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
donotgiveup
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Re: VUSXX vs VMFXX questions

Post by donotgiveup »

tibbitts wrote: Mon Mar 27, 2023 8:46 pm
donotgiveup wrote: Mon Mar 27, 2023 7:18 pm I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
MrJedi
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Re: VUSXX vs VMFXX questions

Post by MrJedi »

donotgiveup wrote: Mon Mar 27, 2023 9:17 pm
tibbitts wrote: Mon Mar 27, 2023 8:46 pm
donotgiveup wrote: Mon Mar 27, 2023 7:18 pm I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
Yes you are missing something.

https://www.vanguard.com/pdf/USGOIN_2023.pdf
donotgiveup
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Re: VUSXX vs VMFXX questions

Post by donotgiveup »

MrJedi wrote: Mon Mar 27, 2023 9:24 pm
donotgiveup wrote: Mon Mar 27, 2023 9:17 pm
tibbitts wrote: Mon Mar 27, 2023 8:46 pm
donotgiveup wrote: Mon Mar 27, 2023 7:18 pm I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
Yes you are missing something.

https://www.vanguard.com/pdf/USGOIN_2023.pdf
Well that is good news for me! Thank you, I just wonder why is it not on 1099-INT and why Vanguard rep. did not know about it.
MrJedi
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Re: VUSXX vs VMFXX questions

Post by MrJedi »

donotgiveup wrote: Mon Mar 27, 2023 9:36 pm
MrJedi wrote: Mon Mar 27, 2023 9:24 pm
donotgiveup wrote: Mon Mar 27, 2023 9:17 pm
tibbitts wrote: Mon Mar 27, 2023 8:46 pm
donotgiveup wrote: Mon Mar 27, 2023 7:18 pm I just talked to Vanguard about my 2022 tax form and learned that VUSXX is NOT state tax exempt.
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
Yes you are missing something.

https://www.vanguard.com/pdf/USGOIN_2023.pdf
Well that is good news for me! Thank you, I just wonder why is it not on 1099-INT and why Vanguard rep. did not know about it.
I don't own it, but VUSXX is a mutual fund that pays dividends, so I think you should have 1099-DIV, not 1099-INT. 1099-DIV does not have a box for US Government obligations, so the exemption must be done manually.
donotgiveup
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Re: VUSXX vs VMFXX questions

Post by donotgiveup »

MrJedi wrote: Mon Mar 27, 2023 9:48 pm
donotgiveup wrote: Mon Mar 27, 2023 9:36 pm
MrJedi wrote: Mon Mar 27, 2023 9:24 pm
donotgiveup wrote: Mon Mar 27, 2023 9:17 pm
tibbitts wrote: Mon Mar 27, 2023 8:46 pm
I didn't own the fund in 2022 but why are you saying it was not state tax exempt in 2022? I'm too lazy to look up the table of Treasury securities percentages again but wasn't it at or near 100% for VUSXX in 2022?
Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
Yes you are missing something.

https://www.vanguard.com/pdf/USGOIN_2023.pdf
Well that is good news for me! Thank you, I just wonder why is it not on 1099-INT and why Vanguard rep. did not know about it.
I don't own it, but VUSXX is a mutual fund that pays dividends, so I think you should have 1099-DIV, not 1099-INT. 1099-DIV does not have a box for US Government obligations, so the exemption must be done manually.
Thank you!
tibbitts
Posts: 23728
Joined: Tue Feb 27, 2007 5:50 pm

Re: VUSXX vs VMFXX questions

Post by tibbitts »

donotgiveup wrote: Mon Mar 27, 2023 9:52 pm
MrJedi wrote: Mon Mar 27, 2023 9:48 pm
donotgiveup wrote: Mon Mar 27, 2023 9:36 pm
MrJedi wrote: Mon Mar 27, 2023 9:24 pm
donotgiveup wrote: Mon Mar 27, 2023 9:17 pm

Because I just check my 1099-INT from Vanguard. Line 3 Interest on US Saving Bonds & Treasury obligation was 0.00 and since I held VUSXX whole 2022 and earn some interest I called Vanguard to check on it. Was told that since it is Money Market fund it is NOT state tax exempt. Not sure if I am missing something.
Yes you are missing something.

https://www.vanguard.com/pdf/USGOIN_2023.pdf
Well that is good news for me! Thank you, I just wonder why is it not on 1099-INT and why Vanguard rep. did not know about it.
I don't own it, but VUSXX is a mutual fund that pays dividends, so I think you should have 1099-DIV, not 1099-INT. 1099-DIV does not have a box for US Government obligations, so the exemption must be done manually.
Thank you!
Still for 2023 the percentage will apparently be less than 100%.
Anovice
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Re: VUSXX vs VMFXX questions

Post by Anovice »

peteyboy wrote: Mon Mar 27, 2023 11:42 am Check out the linked spreadsheet below for data and a graph on VUSXX vs VMFXX yield over the last year.

https://docs.google.com/spreadsheets/d/ ... 1074987830
Why is there such a great fluctuation in the SEC yield of the Muni MM compared to Cash Reserves or the Treasury MM?
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