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Municipal Bond (Fund) Newbie Needs Your Help
Old 04-30-2015, 03:34 AM   #1
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Municipal Bond (Fund) Newbie Needs Your Help

I'm considering investing in a muni-bond fund in a taxable brokerage account @ Fidelity.

I researched Minnesota specific muni funds @ fidelity earlier tonight & came up with these 3.


Fidelity® Minnesota Municipal Income Fund FIMIX

Columbia Minnesota Tax-Exempt Fund Class A IMNTX
*Load: 3.00% (waived at Fidelity)*

Sit Minnesota Tax-Free Income Fund SMTFX


Question 1: Is there a minimum amount of time you have to hold a muni-bond fund ?

The Fidelity fund is the only one of the 3 thats shows a Redemption Period & a Redemption Fee. (30 days & 0.50%)
*I understand that this is to keep 'active' traders away from the fund*

I'm asking about longer periods, 1 year 2 - 3 - 4 - 5 more ?



Question 2: Do you have to reinvest the interest/dividends ?



Question 3: I probably should have made this the number 1 question, as it's the main reason I'm considering a muni-fund

When I retire later this year, I'll be right 'on the bubble' as far income relating to being able to receive any subs under the affordable care act.



In addition to the income being federal & state tax free, is it also tax/income free for ACA income purposes ?


*Someone with the username (jim584672) answered this question in a different thread, but I wasn't 100% sure I understood it*
My fault, not his



Thanks in advance!
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Old 04-30-2015, 06:24 AM   #2
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Quote:
Originally Posted by ownyourfuture View Post
Question 1: Is there a minimum amount of time you have to hold a muni-bond fund ?
Only what the mutual bond fund requires
Quote:
Originally Posted by ownyourfuture View Post
Question 2: Do you have to reinvest the interest/dividends ?
No, you can take them in cash

Quote:
Originally Posted by ownyourfuture View Post
Question 3: In addition to the income being federal & state tax free, is it also tax/income free for ACA income purposes ?
The interest counts as income for MAGI calculation for ACA subsidy.
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Old 04-30-2015, 06:33 AM   #3
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Thanks Michael!
I know AGI is adjusted gross income.
What's the M for ?
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Old 04-30-2015, 06:51 AM   #4
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Thanks Michael!
I know AGI is adjusted gross income.
What's the M for ?
Modified Adjusted Gross Income. See here for ACA specific formula http://laborcenter.berkeley.edu/pdf/..._summary13.pdf
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Old 04-30-2015, 07:52 AM   #5
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Take a look at Vanguard....I don't know if they have a Minn. fund but if they do, compare costs and returns. Also look at time period.....short, interemediate, long......decide how long you want to invest.....longer length, larger return. Then look at State tax.....is it worth paying for another fund and still have a greater return. As an example, If you live in California....up to 11% tax, it's worth buying a California fund with SOME of you money....think about the risk.....if you live in Michigan, the tax is around 5%.....maybe worth paying for added safety and lower cost. I wouldn't touch Detroit muni bonds, however......too much risk.

Sorry I haven't researched Minn. more for you. I have a substantial investment in muni bond funds.....some long, intermediate, limited term and short term....95% at
Vanguard, a few at Fidelity......fees are lower.....I like lower fees. I do pay State taxes.....my State is financially sound......terrible returns on their limited supply of bonds.
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Old 04-30-2015, 09:26 AM   #6
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If you're subject to the AMT, you'll want to know if the fund is free of AMT bonds or what percentage are subject to AMT. Most are AMT-free in my limited experience.
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Old 05-01-2015, 05:48 AM   #7
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Take a look at Vanguard....I don't know if they have a Minn. fund but if they do, compare costs and returns.
Vanguard doesn't have a Minnesota fund.
But thanks for the input.
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