2020 Year-End Distributions

Oh, the fund I was worried about just posted a cap gains estimate over $12 a share!
 
Nope. I’m afraid it’s going to be bigger than last year which was already large. This fund has appreciated the most of my holdings. For many years it paid out almost no cap gains, then the last few years it started paying out increasingly large gains.
 
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% of share price is a better measure of distribution impact than raw $ amount.

I noticed that VG PRIMECAP is at 7.7% realized cap gains as of 9/30/2020. I used to hold a lot of that.
 
Sure. It’s 11% of NAV. I assume that’s based on the 9/30 price, they don’t actually say.
 
audreyh1 said:
Sure. It’s 11% of NAV. I assume that’s based on the 9/30 price, they don’t actually say.
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Wow, that's crazy.

I looked at the distribution tab for VG funds on their pages to see what the realized cap gain is so far, and as of which date. I guess they might be able to harvest some losses before the end of the year to reduce the pain.
 
RunningBum said:
Wow, that's crazy.

I looked at the distribution tab for VG funds on their pages to see what the realized cap gain is so far, and as of which date. I guess they might be able to harvest some losses before the end of the year to reduce the pain.
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Yeah, calculating the estimated distribution, it’s a whopper, and almost 2x last years. But I have a 275% gain in the fund, so what can I say? My cost basis is quite low. I had already gotten rid of the higher cost basis shares a while back.

It’s actually not the biggest distribution I’ve had paid out in the past. I got rid of the worst culprits already.
 
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Sound like these outsized capital gains distributions may cause a lot of people to fall over the ACA subsidy cliff.... especially those who are not paying close attention.
 
pb4uski said:
Sound like these outsized capital gains distributions may cause a lot of people to fall over the ACA subsidy cliff.... especially those who are not paying close attention.
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That was my chief concern - ran some numbers last night and I'll barely squeak under 400% FPL based on current figures. Not much more and I'd have to pay back $9600 in subsidies.

Looks like the cliff this year is $67,640 for a family of two if I'm not mistaken.
 
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An imperfect solution to large unrealized MF cap gains that has been of some help for us is to use them as a primary source for donation to our Fido DAF. I have this issue with our VG Prime cap and now am down to only a couple hundred shares.
 
RunningBum said:
% of share price is a better measure of distribution impact than raw $ amount.

I noticed that VG PRIMECAP is at 7.7% realized cap gains as of 9/30/2020. I used to hold a lot of that.
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Can you give me an example of how this is calculated mathematically? I have an American fund that estimates 4-6 % for long term cap gains. How do I estimate using the number of shares I own, value of my holding, etc.

Thanks.
 
volfan said:
Can you give me an example of how this is calculated mathematically? I have an American fund that estimates 4-6 % for long term cap gains. How do I estimate using the number of shares I own, value of my holding, etc.

Thanks.
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I got that number directly from Vanguard at https://investor.vanguard.com/mutual-funds/profile/distributions/vpmax. The math behind it is the $11.51 realized capital gain as of 9/30/2020 divided by the closing price of $148.12 on that same day.

It doesn't matter how many shares you own. If you owned 100 shares, it would be 1151/14812. 1000 shares is 11510/148120. 7.77% no matter what.

If you want to see what your personal distribution % is based on original purchase price (basis), you would divide $11.51 by whatever price per share you bought it at, but it doesn't really make sense to tell others it's returning a 15% distribution on capital gains just because your shares doubled over time, because that's pretty meaningless to anyone else.
 
volfan said:
Can you give me an example of how this is calculated mathematically? I have an American fund that estimates 4-6 % for long term cap gains. How do I estimate using the number of shares I own, value of my holding, etc.

Thanks.
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Most fund companies estimate $ per share. In your case, perhaps they based it on the share price for a given day and gave the date. Then you can calculate 4-6% of that day’s share price and multiply by the number of shares you own. Otherwise, calculate 4-6% of your total holdings in the fund.
 
Thanks RunningBum and Audreyh1.

I’ve got some calculating to do. Very close to the cut off of not having to pay Cap gains tax. If it is expected to be more than last year I need to adjust our deferred Comp holdings now for taking effect in December to keep us there.
 
volfan said:
...Very close to the cut off of not having to pay Cap gains tax. ...
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So 0% vs 15%?

ETA: and I forgot to mention but as RB notes below, it is just on the excess ... so if you get a $100 surprise capital gains distribution that pushes you over the top of the 0% preferenced tax bracket, the most it would cost you would be $15. Not a big deal.
 
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volfan said:
Thanks RunningBum and Audreyh1.

I’ve got some calculating to do. Very close to the cut off of not having to pay Cap gains tax. If it is expected to be more than last year I need to adjust our deferred Comp holdings now for taking effect in December to keep us there.
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Just remember that's not a cliff. You'd only pay CG tax on the amount over the cut off. Ideally you keep it all from being taxed, but being off by a few dollars doesn't make all CGs taxable.
 
RunningBum said:
Just remember that's not a cliff. You'd only pay CG tax on the amount over the cut off. Ideally you keep it all from being taxed, but being off by a few dollars doesn't make all CGs taxable.
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Thanks. Didn’t realize this. I knew it worked that way for the increase to the next tax bracket but thought all gains would become taxable. It’s not a whole lot, but if I can avoid a few hundred extra in taxes it’s a win!
 
pb4uski said:
It'll be an odd year for me... usually I would be all over this as part of my year-end tax planning, Roth conversion, etc. Since I no longer have stocks in my taxable account... no worries.
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Curious why you no longer have stocks in your taxable account?
 
Anybody remember when ishares/Blackrock usually puts out their end of year estimates? I can't recall when they went out last year.
 
bpgdeg1234 said:
Curious why you no longer have stocks in your taxable account?
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I went into capital preservation mode earlier in the year and was out of stocks... since then I've added about 4% but it was in tax deferred accounts. Luckily, most of my LTCG will fit in under the 0% preferenced income tax bracket.... a little dribbles over into 15%.
 
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