When your Guideline annual account fee is due, Guideline will liquidate a portion of funds in your portfolio to cover the cost. However, because these amounts can sometimes be so small, we cannot sell the amount needed because it doesn’t meet the minimum trading requirement.
In these cases, Guideline will liquidate your assets in the following order for purposes of paying the annual account fee:
Pre-tax employee and employer contribution sources (pro-rata)
Roth contribution sources (pro-rata)
Why VMFXX might appear in your portfolio
After using the funds to pay the fee, Guideline will then use the remaining funds to purchase VMFXX, which is a Vanguard money market fund.
As a result, you may see VMFXX listed in your portfolio, even if you never selected this fund and elected a target allocation percentage. If this happens, Guideline’s system will then trigger a rebalance to move the VMFXX funds to one of your selected assets.
For example, let's assume you only have one holding: VTSAX. If the account fee owed to Guideline is 2¢, and the required minimum to liquidate is 5¢, Guideline would then liquidate 5¢ in VTSAX, take its 2¢, and then purchase VMFXX with the remaining 3¢. Then, a rebalance will trigger to remove VMFXX from your portfolio and move the small amount of money back into your chosen fund, VTSAX.
Check out Guideline’s fund lineup, fee disclosure and ADV 2A Brochure for additional information regarding account costs.