When your annual account fee is due, a portion of funds in your portfolio will be liquidated 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, your assets will be liquidated 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, the remaining funds will then be used 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, the 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 Accrue is 2¢, and the required minimum to liquidate is 5¢, Accrue 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 the fund lineup and ADV 2A Brochure for additional information regarding account costs.¹
¹ Investment advisory services for Accrue's 401(k) products are offered by Guideline Investments, LLC, a third-party SEC-registered investment adviser. For more information regarding fees and services, see Guideline Investment's ADV 2A Brochure and Form CRS.