Merrill Edge fudges tax lots for mutual funds. If on one day I buy:
100.671 shares @$29.80 for $3,000
Merrill records this as either:
100 shares @$29.80 for $2,980, or
100 shares @$29.80
and 1 share @$20 for $3,000
Merrill says that showing two different prices for purchases of a fund on the same day is acceptable. It's silent on the fact that either way, it's got the wrong number of shares purchased that day.
Merrill Edge has an interest-bearing BofA sweep account for cash. ME writes: "You will see it referenced online and on your statements as ML Direct Deposit Program for non-retirement accounts and Bank of America, NA RASP for retirement accounts." Same service, different name, right? Wrong.
In RASP accounts, all the interest is credited to the bank account as you'd expect. In Direct Deposit Program accounts, pennies of interest are not credited to the bank account but instead recorded as additions to a non-interest bearing "cash balance" within Merrill.
My advice about any investment is that if you can't understand it, don't invest in it. The Merrill Edge taxable accounts are either being mishandled or I don't understand them. Either way, I give up. I will be closing all taxable accounts with them.
See also:
https://mutualfundobserver.com/discuss/discussion/47100/merrill-edge-not-very-mutual-fund-friendly
Comments
Sound like Merrill maybe pickpocketing from you and selfpocketing couple of bucks there.
Think most firm do this
It's also horrible when you buy sell individual bonds and their firm always gain few cents per dollars whether you buy or sale private bonds (you always buy few cents higher and sell at fewer cents lower)
Which firm you may start to use sep-ira Schwab or Vanguard?
The problems I described apply only to taxable accounts. Cost basis is meaningless in tax-sheltered accounts. Also, Merrill apparently credits interest correctly for the bank sweep accounts within tax-sheltered brokerage accounts. Even as it gets this wrong in taxable accounts.
So all I'm moving out of Merrill are taxable accounts. My tax-sheltered accounts there will stay. They don't have these problems and qualify me to receive higher cash back rates on BofA credit cards - up to 5.25%.
You do your taxes yourself manually? If you use a program and do auto-importing, all of this problem goes away, ime. (Perhaps you have prior discussed how you do taxes; apologies if so.)
Second, what ultimate difference does any of this make moneywise? You have wisely counseled many here to ignore TFs when investing longterm.
I've previously pointed out that imports don't necessarily match 1099s. So importing may not only fail to make this problem go away, it may compound the problem. Regardless, importing is simply a mechanical process. It doesn't correct brokerage errors or absolve one of reporting wrong figures.
"Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete."
>> What ultimate difference does any of this make moneywise?
Maybe lying, let alone perjury, doesn't matter to some people. But it matters to me, even it's just a little white lie of convenience.
The IRS recognizes that cost basis figures reported by brokerages can be wrong. That's why the 8949 has column (g) for taxpayers to make manual adjustments. I've used that in the past to report wash sales across accounts (which brokerages are required to report incorrectly).
However, that column only provides for adjustments to the cost per tax lot. If the number of shares purchased on a given date is reported incorrectly by the brokerage, there is no explicit provision to correct the size of the tax lot.
I think I may have an acceptable way of working around this. But it might actually cost me a little money in that I'd have to alter which shares I sold when. Still, a small price to pay to preserve my integrity.