I spent some time over the weekend getting caught up in Quicken. While updating our accounts, I discovered something interesting about the way in which Vanguard debits your bank account when processing automatic investments. Instead of making a single withdrawal and then partitioning it up into the various funds that you’re investing in, they make one withdrawal per mutual fund.
In our case, this means that my monthly SEP-IRA contributions result in four debits to our HSBC Direct savings account. This is because the money ultimately goes into four different mutual funds even though they’re all held within the same SEP-IRA.
This probably isn’t a huge deal for most of you, but it’s something to keep in mind. After all, Federal Reserve Board Regulation D limits electronic withdrawals from savings accounts to six per month. Violations of this policy can result in a warning, a service fee, or even being prevented from accessing your funds until the next month.