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Taxable & Wellesley
Old 12-11-2010, 11:51 AM   #1
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Taxable & Wellesley

I know the Wellesley Income Fund is popular here on the forum.
I see the admiral share ER is very reasonable.
Do any/many of you own it in a non IRA/401k environment?
Tax efficiency is pretty important !!!
I'm just wondering how well this fund would work in retirement when all money invested is in a taxable account.
Looking forward to your thoughts.

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Old 12-11-2010, 11:58 AM   #2
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I don't have room for all my bonds in my TSP, so my Wellesley has to be in taxable along with my equity index funds and even some other bond funds. My TSP is 100% bonds.

I am perfectly happy with Wellesley in taxable, though of course you would get more if you got the dividends and LTCG tax free. It does shed a lot of LTCG most years though last year there was none.

What I would do is put all your bonds and such in your 401K and IRA, and then if there is room put your Wellesley there. If not, put it in taxable. That's really all that I know of to do about it. Some people choose tax exempt bond funds instead, so check those and see if they would help in your case (and location, tax bracket, etc).

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Old 12-11-2010, 03:32 PM   #3
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Like W2R I own Wellesly in a non-taxable account. My VG IRA is also 100% Wellesley. DW's Fidelity IRA and my 401k hold all our bond index funds. My 35% stake in equities is in index funds outside the IRA's but I am not going to overload on equities against my target AA just so I don't have to pay some taxes.

I know it's not as tax efficient as it can be, but I'm comfortable with it.
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Old 12-11-2010, 04:02 PM   #4
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It really depends on whether you need those distributions to live on.

Remember, if you hold Wellesley in a taxable account, any LT gains and qualified dividends in the distributions are currently taxed at the more favorable 15% maximum rate. This would also apply to any LT gains on the sale of shares. If you hold Wellesley in a retirement account, all distributions are taxed as ordinary income when withdrawn from the retirement account.
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