Vanguard IRA with less than the fund minimum (recharaterization)

[frugalnacho]

I have to recharacterize most of my 2017 traditional IRA contributions because I am over the income limit to contribute to a tIRA.   I split my contributions between VTSAX and VTIAX.  I don't currently have a roth IRA (I just created an account at vanguard to complete the recharacterization, but it has no balance).  I've already contributed to my tIRA for 2018 too.

The vanguard form says recharazterizations are moved in kind to the new account.   The balance for VTSAX and VTIAX is going to be below the $3000 fund minimum.  Is that going to be a problem?

[frugalnacho]

Anyone know how vanguard will handle this?

[Proud Foot]

I am not sure if this is normal treatment but in one of my accounts I have approximately $600 in VTSMX. I had the $3k minimum to purchase and then have sold some off as I purchased individual stocks. So far I have not had any issues with it and have been able to make additional purchases of VTSMX. For me it seems that the fund minimum is only to establish the investment but you are not required to keep $3k as a minimum amount invested in that fund. If they do move the investments in-kind to your Roth IRA then I don't believe it should affect your investment in VTIAX. I'm not sure on the VTSAX if they will convert it down to VTSMX or leave it as VTSAX. If they make you sell and move it into cash then you can purchast the ETF versions of those funds.

[frugalnacho]

I'll have enough that I can consolidate to a single fund in that account.  That was my plan once it's all settled, but it doesn't seem to be an option right now though, the only option is to just transfer the funds in kind to the other account. I just didn't know if they would transfer less than the fund minimum or how they would handle it.

Another wrinkle though, I rolled over my 401k into my IRA in 2017 also, not anticipating that I would not be eligible to make a tIRA deduction and need a recharacterization.  How is that calculation going to work?  I put money into the IRA, then rolled a large 401k balance into it, then made several more contributions.