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mrmcd posted:Can a mutual fund in a taxable account trigger a tax bill without actually sending you any cash? Or is it just like dividends where it's only when you actually get paid out, and all the sad stories from the great vanguard debacle are people who just thought they got a big cash payment and didn't realize there'd be taxes on it? No, there are only taxes on realized gains so they have to issue a payment for there to be taxable income. Most people automatically reinvest these payments so they dont exactly see the money in their bank account, but that is a choice. You certainly can have any distributions paid out as cash.
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Apr 21, 2023 22:35
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Motronic posted:Yes, it's micromanging efficiency. You're fine. Thanks that's what I thought. I'm definitely not going to sell a bunch at a profit to switch. I think given fidelity does not seem to even offer an etf for this I'm just going to go along in blissful ignorance. pmchem posted:lol @ bolded. love you hawk 
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Apr 21, 2023 22:38
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Actually, there are other good reasons to get dividends paid out as cash in taxable portfolios. I do it because it makes rebalancing easier - reinvesting distributions from your better performing assets into your worse performing ones allows you to get closer to your target allocation without adding new funds or selling.
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Apr 21, 2023 22:42
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drk posted:No, there are only taxes on realized gains so they have to issue a payment for there to be taxable income. Most people automatically reinvest these payments so they dont exactly see the money in their bank account, but that is a choice. You certainly can have any distributions paid out as cash. Lol. I looked up the "Vanguard TDF debacle" to get the back story and the NYT literally has someone whinging about how Vanguard caused them to get a $70,000 tax bill. At 20% capital gains rate, that means they got a $350,000 payment. The same article said that these vanguard funds paid out ~12% capital gains during this annus horribilis, meaning this person had just under $3 million sitting in a taxable account. Excuse me while I play the tinniest violin for this NYT everyman who cannot afford tax and financial planning, hosed over by big vanguard.
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Apr 21, 2023 22:47
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Yeah, its like, theoretically un-optimal to pay taxes any sooner than you have to, but John Q Everyman there making a $350,000 profit on a single asset in a single year is exactly the sort of problem most people could only dream of having. edit: I guess its a bit more complicated than that because when you buy into a fund, you are also potentially buying into some unrealized gains. For example, VTSAX is currently 46% unrealized gains. In practice that fund will try to never realize any of those gains, but if they needed to sell substantial portions of their holdings for some reason, shareholders could potentially have quite large tax bills even if they didnt actually turn a profit on their initial investment. drk fucked around with this message at 00:16 on Apr 22, 2023 |
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Apr 21, 2023 23:20
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H110Hawk posted:pmchem is bullying me in the US Tax thread saying I shouldn't have Mutual Funds in my taxable brokerage, but I could have ETFs, but I don't know why. Why one over the other? I'm 100% at fidelity with a blend of FSKAX and FSPSX in my taxable account. You could hold Vanguard mutual fund, which have a patented way of avoiding most capital gain distributions. But don't hold target date funds or some actively managed funds in a taxable brokerage account. literally this big fucked around with this message at 07:18 on Apr 22, 2023 |
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Apr 22, 2023 07:15
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Actual cover of Bloomberg Businessweek for this week
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Apr 22, 2023 10:09
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SGOV Gang stays winning just waiting to scoop the market correction dip when the recession hits
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Apr 22, 2023 14:48
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FistEnergy posted:just waiting to scoop the market correction dip when the recession hits Ell ya bruv, got that dry powder
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Apr 23, 2023 05:06
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FistEnergy posted:SGOV Gang stays winning Remember folks, #1 priority of Long Term Investing & Retirement... Time. The. Market.
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Apr 23, 2023 07:16
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EmmaDilemma posted:Remember folks, #1 priority of Long Term Investing & Retirement... I know you’re joking but I flinched reading this post lol.
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Apr 23, 2023 12:19
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This weekend's 3 mo treasury auction closed at 5.216% which is an eye popping 5.75% tax equivalent yield for me here in CA
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Apr 25, 2023 00:51
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Short term treasury yield curve is still really weird. Specifically right at the start of June rates shoot up from ~3.6% to ~4.7%. Before that date, all mid 3%s, after that point hovering between 4.6-5.1% out to the end of the year. Almost down to the day: 5/30/23 zeroes - 3.621% 6/1/23 zeroes - 4.08% 6/6/23 zeroes - 4.78% I guess the market is pricing in the debt ceiling hitting the fan right around that point.
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Apr 25, 2023 01:53
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I just inherited a traditional (not Roth) IRA, and as best I can tell from the IRS rules (https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary) I follow the 10-year rule (death of the account holder occurred in 2020 or later, non-spouse beneficiary, not an eligible designated beneficiary). This means that some time in the next 10 years I have to withdraw the entire account balance. Is there any reason to wait some or all of the 10 years? I can see why you might want to let it keep growing tax-free if it were a Roth, but I can't think of any reason not to pull the money now given that it's a traditional IRA.
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Apr 25, 2023 17:23
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Muir posted:I just inherited a traditional (not Roth) IRA, and as best I can tell from the IRS rules (https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary) I follow the 10-year rule (death of the account holder occurred in 2020 or later, non-spouse beneficiary, not an eligible designated beneficiary). This means that some time in the next 10 years I have to withdraw the entire account balance. Is there any reason to wait some or all of the 10 years? I can see why you might want to let it keep growing tax-free if it were a Roth, but I can't think of any reason not to pull the money now given that it's a traditional IRA. I think trad IRA withdrawals are taxed as (something close to income), so depending on the amount and your current and projected income over the next 10 years, it could be beneficial to space things out. If you're NOT going to just withdraw everything immediately, you probably want to review what it's invested in and (maybe) adjust based on asset allocation and fees. Maybe even roll to a different provider if it's in a really lovely one.
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Apr 25, 2023 17:34
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CubicalSucrose posted:I think trad IRA withdrawals are taxed as (something close to income), so depending on the amount and your current and projected income over the next 10 years, it could be beneficial to space things out. I'm pretty sure the basis value resets to the market value at the time of the account holder's death, so if I sell now there should be no gains. EDIT: Or maybe I'm very wrong about that. IRAs are an exception to the step up in basis value?
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Apr 25, 2023 17:35
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Schwab has a decent article here. Seems pretty clear you are taxed on distributions and you may also be required to take RMDs.
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Apr 25, 2023 17:43
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Muir posted:I'm pretty sure the basis value resets to the market value at the time of the account holder's death, so if I sell now there should be no gains. Oh also, a chat with a CPA could be a big help here. I feel like I shill for CPAs a bunch, but so many decisions are "it depends" and paying a few hundred bucks to avoid a 5-or-6-figure mistake seems like a very reasonable decision.
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Apr 25, 2023 17:50
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Makes sense. I think realizing that the basis doesn't step up answered the question of why I wouldn't just take it in a lump sum ASAP. And yes, I think a chat with a CPA is in my near future. Thanks all.
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Apr 25, 2023 17:57
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Muir posted:Makes sense. I think realizing that the basis doesn't step up answered the question of why I wouldn't just take it in a lump sum ASAP. And yes, I think a chat with a CPA is in my near future. Thanks all. There are a lot more reasons you wouldn't necessarily take it as a lump sum even if the basis stepped up considering it's a tax sheltered account. You should speak to a CPA and probably also a CFP to help you work out goals and the mechanics of how to reach them.
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Apr 25, 2023 18:04
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Yeah you're just getting income, there's no step-up in basis. Basically if you are firmly within the 22/24% brackets I would run the RMD numbers on lump sum vs 10-year method vs life-expectancy method and withdraw the greater of the RMD or the amount to keep you within 22/24% brackets. This assumes you aren't expecting some wild change in income up or down in the next 10 years. So if you're MFJ $100k AGI, the brackets are $83,551 to $178,150. You could withdraw $78,150 from there without any "tax bracket penalty" as it were moving up to 24%. If you're at MFJ $200k AGI, $178,151 to $340,100 bracket, you could do $140,100 before jumping to 32%. And remember it's only dollars above those withdrawn amounts which are at the higher bracket. So if you did $141,100 in the second example, only $1000 would be at 32%, for a $80 increase in taxes. The math is the same if you're in the 12% bracket, which jumps to 22%.
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Apr 25, 2023 18:08
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H110Hawk posted:Yeah you're just getting income, there's no step-up in basis. Basically if you are firmly within the 22/24% brackets I would run the RMD numbers on lump sum vs 10-year method vs life-expectancy method and withdraw the greater of the RMD or the amount to keep you within 22/24% brackets. This assumes you aren't expecting some wild change in income up or down in the next 10 years. We're pretty solidly in the 22/24% brackets, yeah. This IRA is about a quarter of the estate, with another quarter in non-retirement accounts, and the other half in what was her primary residence. It's been less than a month so I'm still getting my head around it all and starting to think about what to do with it. Edit: I know there's a sizable Bay Area contingent on these forums, if anyone has recommended CPAs or CFPs please PM me. Thanks! Muir fucked around with this message at 18:55 on Apr 25, 2023 |
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Apr 25, 2023 18:36
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You have until 12/31 to execute your decision near as I can tell. There is 0 need to rush this or even do anything at all this quarter. Talk to your estate attorney, they probably have someone they can shill you who understands inherited assets. At a minimum you can price check them or see if it overlaps with who your friends suggest. It's also a different thing if it's $25k vs $1,000k.
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Apr 25, 2023 19:07
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FistEnergy posted:SGOV Gang stays winning My play-money brokerage account swung VT from 77 to 94, not sure how low to go before hopping back in. (Tax-advantaged and workplace retirement accounts are all globally indexed and will not be timing anything.)
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Apr 25, 2023 21:49
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Muir posted:We're pretty solidly in the 22/24% brackets, yeah. This IRA is about a quarter of the estate, with another quarter in non-retirement accounts, and the other half in what was her primary residence. It's been less than a month so I'm still getting my head around it all and starting to think about what to do with it. I'm a bit late, but as someone who also inherited an IRA yeah, the reason not to take it all at once is tax brackets - every dollar you take out counts as an extra dollar of income. I basically wait until near the end of the year and then plan my distributions based on that. Apparently that's why they recently changed the rules to a 10 year max - the government didn't like people sitting on their inherited IRAs.
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Apr 25, 2023 23:16
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Has anyone used Vanguard Personal Advisor? I got an e-mail/call from them and actually talked to them because I was under the impression that if you had assets with Vanguard you could get access to a fee for service CFP. I'd be willing to pay a few hundred dollars to have someone tell me how smart and good looking I am in front of my wife (  ). Apparently I was mistaken, and their service hinges on yes, using a CFP, but making you pay for their advisory services with a 0.30% AUM, or $3k/year per 1M invested. The vanguard sales person pointed out that this was significantly lower than the 1% fee that's standard in the industry, they're fiduciaries that use Vanguard funds, etc, but I'm trying to figure out if there's anything that they do that's significantly harder/greater than what I'm doing on my own. She mentioned things like 529s, UTMAs, taxable investment advising, and financing for purchases like vacation homes (portfolio lending?), but I'm wondering how they could help with those things beyond telling me that they exist. The conversation set off some sirens in my head (she mentioned how busy I must be, how complicated some people find this, etc) that I associate with financial advisors, but I'm generally pro Vanguard and was curious if anyone else had looked in to it.
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Apr 26, 2023 00:35
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Residency Evil posted:The conversation set off some sirens in my head Good instincts. Just ignore this "service" and keep using them as a brokerage. It's better than most, but it's still real bad. Why again are you trying to do this? Are you getting wrapped up in another doctor scam or are you unable to find a CPA and lawyer who can handle estate issues?
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Apr 26, 2023 00:44
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Motronic posted:Good instincts. Just ignore this "service" and keep using them as a brokerage. It's better than most, but it's still real bad. Fidelity gives me this call every 2 years as well. The most recent one the guy obviously had freshly symptomatic covid and it was the most horrifying call I've had the pleasure of listening to in a while.
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Apr 26, 2023 00:57
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You all answer your phone from unknown numbers still?
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Apr 26, 2023 01:29
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Popete posted:You all answer your phone from unknown numbers still? I don't even answer unprompted phone calls from numbers I do know. If it's important, they'll leave a message-- the message itself is usually sufficient. If I'm going to talk on the phone it's going to be from my work phone to a work phone, or it's scheduled in advance.
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Apr 26, 2023 01:40
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Reminder for those considering buying I Bonds at the current rate:Treasury Direct posted:Rate Change Deadline: To receive the current 6.89% rate for I Bonds in TreasuryDirect, you must complete your purchase by 11:59 p.m. Eastern Time on Thursday, April 27. I thought it was the end of the month and almost missed it.
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Apr 26, 2023 02:43
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drk posted:Reminder for those considering buying I Bonds at the current rate: I'm gonna be daring and hold out to see if the fixed rate goes up. Also with 1-2 year fixed income stuff hovering around 5% I don't feel a big FOMO for potentially missing out on 5.34% averaged between this and the next 3.38% rate - if the fixed rate doesn't go up I could probably get similar performance elsewhere. This may end up being a mistake.
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Apr 26, 2023 03:34
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Depends how long you intend to hold them. Since the variable rate is known to be lower starting in May, TIPS watch caluclated the breakeven time for various fixed rates:TIPS watch posted:Here are the breakeven dates for I Bonds bought in May (at the new 3.38% variable rate and different fixed rates) vs. I Bonds bought this month (at the current 6.48% variable rate and 0.4% fixed rate).
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Apr 26, 2023 04:01
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drk posted:Depends how long you intend to hold them. Since the variable rate is known to be lower starting in May, TIPS watch caluclated the breakeven time for various fixed rates: I mean, yeah, that's my plan, more or less on the rationale that since short term investments offer similar yield to I-Bonds right now they have more promise as long term investments. But if the fixed rate doesn't go up then it's obviously a bad decision (though in that case I probably just won't buy I-Bonds this year).
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Apr 26, 2023 04:35
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Popete posted:You all answer your phone from unknown numbers still? Vanguard will stop calling if you tell them to. After I responded I noticed an email ad from vanguard about exactly this. It appears to be a very incomplete and underwhelming rebrand of their normal management offering. It's certainly not something I'd consider estate planning.
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Apr 26, 2023 14:09
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I thought the main draw of the I bonds last year was the eye popping interest rates due to high inflation. It seems like inflation has gone down while T-bill rates have gone up, so is there a reason to buy new I bonds now?
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Apr 26, 2023 15:04
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If you are going to hold i bonds for long term the higher fixed rate could be attractive.
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Apr 26, 2023 15:19
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Yes, I Bonds are a useful part of a long term portfolio due to a unique combination of factors: 1) Inflation protected 2) Deflation protected 3) State tax exempt 4) Tax deferred until redemption Since the most common fixed rate is 0.0%, buying in when there is a fixed rate above zero makes sense for long term holders. The main downside is over the long term, they will almost certainly lag the returns of equity investments. So, they have a role mostly in emergency funds and/or as a portion of long term fixed income allocation.
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Apr 26, 2023 15:39
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Just got the SGOV annual report. It says the expense waiver is good until the end of June and didn't say anything about renewing it. They did say they're implementing a waiver for the next year for the 25 year T-bills fund though.
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Apr 26, 2023 16:41
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Is the main benefit of SGOV versus SPAXX or VUSXX just that it's pure treasuries and better tax treatment for residents of high tax states?
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Apr 26, 2023 17:03
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