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06-20-2019, 12:45 PM
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#1
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Full time employment: Posting here.
Join Date: May 2014
Posts: 977
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Vanguard MinTax method
I received an email from my Vanguard friends encouraging me to log in and select "MinTax" method for future withdrawals. "Our enhanced cost basis method—"MinTax"—may help you save on taxes when you sell shares, by attempting to sell lots with losses before lots with taxable gains."
Since starting with Vanguard about 8 years ago, we have been in the accumulation phase and to date, have never withdrawn anything, so I am unclear if this MinTax method is advisable. Is there a downside to this?
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06-20-2019, 12:56 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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I think I do much the same thing by just selecting lots or portions of lots to sell by eye.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-20-2019, 01:18 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,523
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Depends on your age and future income. Do you want to even out taxes throughout your retirement, or are you trying to leave an inheritance? If you want to leave the largest inheritance possible, then by all means, use Min Tax. If you want to pay less taxes now, and aren't worried about higher tax rates later when RMDs and/or SS kicks in, then you may want to choose Min Tax. If you want to pay taxes to fill in a trax bracket, another option may better suit you.
All of that said, I don't see this option in my VG brokerage account.
__________________
Balance in everything.
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06-20-2019, 01:25 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
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I don't see this option in either the description of cost basis methods, or my options if I try to change them.
I googled and don't see too much of this, though I do see a Bogleheads thread where someone asked about Mintax and HiFo (Highest in, first out). Neither of these are available to me now.
When you say "my Vanguard friends" do you mean Vanguard, or a friend who has Vanguard and might be grandfathered into an old method?
I like full control and verification. I would probably stick with Spec ID unless I could be assured it would show me which shares it was picking, and I could verify those are the ones I want. I probably always want the loss or least gain, but perhaps there is some scenario where I wouldn't.
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06-20-2019, 01:35 PM
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#5
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Full time employment: Posting here.
Join Date: May 2014
Posts: 977
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Sorry, I meant my VG advisor. I have not selected the MinTax option yet. I am a Voyager Select client, if that means anything. I will be speaking with my advisor in a couple weeks, but was just interested in the general feedback from this educated group.
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06-21-2019, 07:29 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by pb4uski
I think I do much the same thing by just selecting lots or portions of lots to sell by eye.
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I agree. It sounds like "MinTax" just selects the shares with the highest basis (probably disregarding shares that don't qualify for LTCG treatment). It's easy enough to do this yourself by just choosing the "Specific Identification" method and picking from the list.
Yes, there are plenty of times I've deliberately sold shares with the >highest< accrued gains. Someone might do this if they were in the 12% tax bracket (so, zero % taxes on cap gains) and wanted to take some money out for spending. Selecting these "low basis" shares then makes sense, before they move into a higher tax bracket in a few years (or the laws change).
Unless MinTax does something more sophisticated, I'd prefer to have more control over things.
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06-21-2019, 09:29 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,134
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Not everybody is among the financial cognoscenti here. A service like this could be of value to a person who simply wants to 'set it' and 'forget it'. I can see the more financially literate half of a couple doing this for his/her partner.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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06-22-2019, 09:25 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,184
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Quote:
Originally Posted by Chuckanut
Not everybody is among the financial cognoscenti here. A service like this could be of value to a person who simply wants to 'set it' and 'forget it'. I can see the more financially literate half of a couple doing this for his/her partner.
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Sure, it's a good choice if you really don't want to deal with it, or don't feel capable. OP asked for downfalls. What some of us are saying, if you do stay on top of these things, do you fully trust that they'll sell the ones you should?
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