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Old 05-13-2019, 10:18 PM   #21
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I should have said stay within the 12% tax bracket (for the zero capital gains tax bracket), but the amounts I stated sort of corrected my comment. My RMD actually starts in the year I turn 71, as I don't turn 70.5 until after January of the following year (gives me three more years to move money around).

We have been using taxable accounts, social security, and a little Roth (when needed) for living expenses the last ten years since we retired early. We've been manipulating income for ACA and taxes. I look to minimize any taxable account income once my RMD starts (wife's start 2 years later). I will pull RMD and then look to do additional withdrawals in the form of Roth conversions up to the 22% tax bracket. Our investments are spread out over TIRA, Taxable Accounts, and Roths (in that order of amounts). No pensions

Wanted to let you know, as I am somewhat walking in your shoes, and implementing pretty much what your asking about here. When our RMDs start - have no need to utilize taxable accounts for income (but maybe emergencies as they will inevitably come up). Our goal is to hopefully pass the taxable accounts on to our daughters - who will inherit them with a stepped up basis (no tax). Really worried about the ever changing Federal Govt. and their money grab attempt with them looking to eliminate the Legacy IRA (stretch IRA). If that scenario should ever come to pass - going to be a real big headache for us (and others in our situation).
I am one year into Medicare so I don't need do the ACA thing anymore. I don't need the aftertax money either but was trying to minimize taxes so I could maximize my roth conversions before RMD's. Hopefully they will extend the age for starting RMD's.
Best wishes with your plan.
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Old 06-07-2019, 10:33 AM   #22
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When reviewing the Vanguard funds on their site, which specific measure/parameter can I look at to determine each funds tax efficiency?
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Old 06-07-2019, 10:59 AM   #23
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When reviewing the Vanguard funds on their site, which specific measure/parameter can I look at to determine each funds tax efficiency?
Far as I know, it's not on the VG website. Try M* "tax" tab instead. For example, here's the info for VG Tax Managed Balanced Admiral (VTMFX)..

Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) Fund Tax Analysis
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Old 06-07-2019, 11:02 AM   #24
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Our after tax fund Wellesley threw off a lot of CG & dividends last year and expect our after tax fund to grow over the years so I am thinking of changing to something more tax efficient for the long term
hi what do you mean change to more tax efficient and why ? Is it because of the CG pushing AGI over $78750 (married) therefore triggering more taxes ? Also if one is retired and has no income does it mean they are in 12% bracket therefore all CG/dividend(Not bank account interest right ?) up to $78750 are tax-free ?

Quote:
Plan on doing roth conversions the next few years followed by RMD's so would like to keep our taxes as low as possible.
What does it mean for this strategy to keep taxes as low as possible - the reasons ?

I'm trying to learn.
Thanks !
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Old 06-07-2019, 11:13 AM   #25
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When reviewing the Vanguard funds on their site, which specific measure/parameter can I look at to determine each funds tax efficiency?
In the fund list, pick the funds you want to compare. Note the three tables:

Average annual performance (this is before taxes)

Average annual total return—after taxes on distributions

Average annual total return—after taxes on distributions and sale of fund shares

It'd be nice if you could see the info a little closer together, but basically this tells you how tax efficient they are. Note, for example, how close VG Total Market is for total return after taxes on distributions to the before taxes number. Compare that to a managed fund like Primecap that tends to have a lot of CG distributions as well as dividends. But the Total Market index racks up more unrealized CGs so when you go to sell, you'll be paying on the gains then. Still, it's a better fund to have when you want to limit distributions and taxable income while holding the fund, perhaps for controlling MAGI for ACA subsidy purposes.
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Old 06-07-2019, 11:26 AM   #26
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hi what do you mean change to more tax efficient and why ? Is it because of the CG pushing AGI over $78750 (married) therefore triggering more taxes ? Also if one is retired and has no income does it mean they are in 12% bracket therefore all CG/dividend(Not bank account interest right ?) up to $78750 are tax-free ?



What does it mean for this strategy to keep taxes as low as possible - the reasons ?

I'm trying to learn.
Thanks !
Yes it was the Capital Gains in Wellesley that bumped up my taxes for last year and since I don't currently need the income a fund with low turnover will help.
If I needed the income I probably would have left it alone.

The less I pay to the govt. the more my nest egg grows.
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Old 06-07-2019, 02:57 PM   #27
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When reviewing the Vanguard funds on their site, which specific measure/parameter can I look at to determine each funds tax efficiency?
They will show the turnover rate and capital gains and dividends.
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Old 06-07-2019, 03:36 PM   #28
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Thanks for the pointers guys. In looking at the after tax return, I imagine I will find this if I pore over the small print, but what bracket or marginal rate do they assume for the calculation?
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Old 06-07-2019, 03:42 PM   #29
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I was wondering that myself. I'd have to pore over the small print to answer, so I'll let you! For LT cap gains and qualified divs, I would assume 15%.
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