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Old 07-27-2015, 07:17 AM   #21
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what I was thinking looking at my own portfolio in my taxable account I have lots of capital gains to realize once I retire and start drawing down the taxable account first. If I look at Vanguard Total Stock Market VTI it was at 34 with the 2009 low and is now 107. Maybe your picks are "lucky" enough to have tax-loss offsets but my last 5 years just haven't provided the opportunity to offset these gains. I also saw the other problem mentioned as I owned some FBIOX biotech that last year decided to do a capital distribution and hence I saw the taxable income I could not avoid. I have followed the philosophy of bonds in my tax deferred and tax free accounts but when I look at the last five years in hindsight I certainly would have been better off from a tax minimization perspective to have done the opposite.
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Old 07-27-2015, 02:58 PM   #22
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Originally Posted by LOL! View Post
Not in recent times, so "never" is not quite right. I am sure I paid some cap gains taxes when I was much younger before too many index funds were conceived and made available to retail investors.

I still have 6-figure carryover losses to which should last quite a number of years going forward. Presently, my unrealized gains in taxable accounts exceed the carryover losses amount.

Another thing that can help is donating appreciated shares to charity such as a donor-advised fund. This avoids not only the cap gains taxes, but the income as well.
Thanks LOL.

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Old 07-28-2015, 08:20 AM   #23
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About 40% of our holdings are in taxable accounts with 60% in tax deferred accounts. We're not retired yet, but the AA in our taxable accounts is about where we want it to be when we do retire. In it, the bond holdings are primarily muni-bond funds (with some TIPs and a smidgen of EM bond funds thrown in) and our stock funds have fairly low turnover. The deferred accounts are more aggressively weighted towards stock funds with the idea (hope) that we can live off of the taxable accounts until 70. All bond funds in those account are taxable bond funds. Over time, we'll bring the deferred accounts AA down to where our taxable accounts are today.

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Old 07-28-2015, 11:03 AM   #24
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what I was thinking looking at my own portfolio in my taxable account I have lots of capital gains to realize once I retire and start drawing down the taxable account first. If I look at Vanguard Total Stock Market VTI it was at 34 with the 2009 low and is now 107. Maybe your picks are "lucky" enough to have tax-loss offsets but my last 5 years just haven't provided the opportunity to offset these gains.
We have lots of unrealized capital gains from positions purchased in March and April 2009 in our taxable accounts. They were purchased with money realized from selling other positions at a loss in tax-loss harvesting moves. Yes, there have been only smallish opportunities to tax-loss harvest since April 2009, but I can assure you that we take every such opportunity that presents itself.

That written, our carryover losses date from 2009 and earlier. As we draw down our taxable accounts, we do offset realized gains, so no taxes. We are not withdrawing a large percentage of taxable assets every year, so by the time our losses are used up offsetting gains, we should be in the 15% marginal income tax bracket where LTCG are taxed at 0%.

So to summarize: carryover losses offset cap gains while we are in a higher tax bracket, then when in lower brackets, gains are tax-free. Ain't that nice?

And in the meantime, Roth conversions are happening. I have traditional 401(k) and a Roth 401(k), so I can convert within those plans pretty easily as my tax situation allows.

So to get back to the thread topic: Tax efficiency is complicated by the future. Most of the "studies" that I have read do not cover the situations that I find myself in, so there are no "rules of thumb". It is helpful to understand the tax rules and how different kinds of accounts and income are taxed and come up with one's own plan.
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