2021 Year-End Distributions

[Sunset]

We are largely out of funds for our taxable accounts, because of this surprise that happens occasionally and blows any tax planning out the window...

I have also learned to wait until the year is mostly over before considering roth conversions.

 

[marko]

I guess it's good that someone is happy about the year-end distributions from TRP.

In the words of that great wit Mike Tyson: "I don't know whether to be ecstatic or ludicrous!"

 

[Looking4Ward]

I seem to post this every year but you can see a Vanguard fund's potential CG Distribution throughout the year by clicking on the "Distributions" tab for that fund (not your account) and scrolling down to Realized/Unrealized Gains.

For instance, Wellington Admiral is currently showing $4.86 a share as of 9/30 with fiscal year ending 11/30. I've found that by this time of the year those numbers hold pretty true for year end cap gains estimates:

https://investor.vanguard.com/mutual-funds/profile/distributions/vwenx

 

[PaunchyPirate]

For anyone invested in a Jensen fund, it looks like they have posted their estimated capital gains distributions for December. The documents can be found on each individual fund in the Tax Information download section.

JENSX, which I own, is estimated to pay Long-Term/Short-Term gains of $3.98/$.04 per share compared to $4.73/$0 for last year.

 

[RunningBum]

What happens when a fund has a realized capital loss? VG S&P 500 index (VFIAX) and Total stock market (VTSAX) both have losses as of 9/30/2031.

Edit: Or maybe it's 2021!

 

[Sunset]

What happens when a fund has a realized capital loss? VG S&P 500 index (VFIAX) and Total stock market (VTSAX) both have losses as of 9/30/2031.

Are you using a time machine

I believe with fund losses:
You get nothing, don't get to claim the loss. Supposedly the fund holds onto the loss and uses it to offset gains in future years.

 

[SecondCor521]

Are you using a time machine

I believe with fund losses:
You get nothing, don't get to claim the loss. Supposedly the fund holds onto the loss and uses it to offset gains in future years.

Correct on both points.

 

[RunningBum]

Are you using a time machine

I believe with fund losses:
You get nothing, don't get to claim the loss. Supposedly the fund holds onto the loss and uses it to offset gains in future years.

Thanks. I was pretty sure I didn't get to use the loss. It makes sense that the fund could hold onto it. And if they can't, I assume that before the end of the year they would do a sell and immediate repurchase of a winner to use up the loss, and lower their unrealized gains. I can't imagine it ever gets lost unused.

 

[ERD50]

We are largely out of funds for our taxable accounts, because of this surprise that happens occasionally and blows any tax planning out the window...

I have also learned to wait until the year is mostly over before considering roth conversions.

+1 But have any of the major broad-based index ETFs ever had a cap gains distribution? Or is the way they are structured preclude that?

Thanks. I was pretty sure I didn't get to use the loss. It makes sense that the fund could hold onto it. And if they can't, I assume that before the end of the year they would do a sell and immediate repurchase of a winner to use up the loss, and lower their unrealized gains. I can't imagine it ever gets lost unused.

I dunno, but I'd think the loss is reflected in the NAV, so you get the loss included when when/if you sell? It never gets broken out separately?

-ERD50

 

[RunningBum]

I dunno, but I'd think the loss is reflected in the NAV, so you get the loss included when when/if you sell? It never gets broken out separately?

-ERD50

Couldn't you use the same logic about gains?

 

[ERD50]

Couldn't you use the same logic about gains?

But we are talking taxes here, set by Congress. What's logic got to do with it?

But I'd guess the idea is that gains must be distributed/taxed in the year they are realized. Since the fund realized the gain, they have to distribute it to you. The stocks that just went up and are in the NAV are unrealized (untaxed) gains.

But Congress decided they wouldn't 'force' the loss on you, but the fund can net realized gains and losses (I assume?). To take advantage of the loss, you need to sell the fund yourself (and if at a gain, the gain will be less due to any embedded losses).

I think?

-ERD50

 

[SecondCor521]

^ Mostly but not completely correct.

Yes, mutual funds can net realized gains and losses every year, just like a taxpayer can.

Yes, mutual funds must distribute (almost all? all?) of their realized gains to shareholders, who will then pay taxes on them on their individual returns. (Ditto dividends and interest.)

Yes, mutual funds can carry over capital losses indefinitely and can use them to offset future realized gains.

No, those carry over capital losses are not reflected in the NAV. Your capital gain or loss on the mutual fund itself is just based on the selling NAV minus the purchase NAV (and adjusted for the cost of sale, but that's minimal to nonexistent these days). There is no adjustment to your capital gain or loss situation as a result of any embedded realized capital losses; those will only benefit shareholders who hold the fund when (or if) it ever realizes capital gains in the future, which can be offset by the embedded carryover capital loss. Those future shareholders will thus have a lower (or no) capital gain to report.

I think, but I'm fairly certain. (Oh, the hubris!)

 

[audreyh1]

What happens when a fund has a realized capital loss? VG S&P 500 index (VFIAX) and Total stock market (VTSAX) both have losses as of 9/30/2031.

Edit: Or maybe it's 2021!

Unrealized capital losses don’t count until you realize them.

If the fund realizes capital losses, those offset future (or current undeclared) realized capital gains.

 

[ERD50]

^ Mostly but not completely correct.
....

Yes, mutual funds can carry over capital losses indefinitely and can use them to offset future realized gains.

No, those carry over capital losses are not reflected in the NAV. ...

I think you are correct in that there is no book entry made for that loss against the NAV. The NAV really is whatever it trades at, and we hear of closed end funds trading above/below book value. The losses are only booked against gains (and held against future gains).

I only meant (but I wasn't explicit) that indirectly, if the fund is routinely selling at losses that outstrip gains, I'd expect that to affect the value that the fund trades at, eventually.

-ERD50

 

[Gill]

I just saw Fidelity posting its 2021 year-end distribution estimates, at least its first shot at them.



https://www.fidelity.com/mutual-funds/information/distributions#/?table=estimated



No year-end dividends, just cap gains, unfortunately.

.

Why do you want dividends? Do you enjoy paying taxes?
Gill

 

[RunningBum]

Why do you want dividends? Do you enjoy paying taxes?
Gill

I think they are saying that year end dividends estimates have not been posted yet. Unfortunate if you are trying to do year end planning.

 

[Gumby]

We are largely out of funds for our taxable accounts, because of this surprise that happens occasionally and blows any tax planning out the window...

I have also learned to wait until the year is mostly over before considering roth conversions.

So, if I'm understanding correctly, it would be better to hold ETFs rather than the equivalent mutual fund in a taxable account so that you can control realized gains. So, for example, you would want to hold VTI versus VTSAX.

 

[MichaelB]

So, if I'm understanding correctly, it would be better to hold ETFs rather than the equivalent mutual fund in a taxable account so that you can control realized gains. So, for example, you would want to hold VTI versus VTSAX.

Yes, unlike a mutual fund, with an ETF there are no capital gains distributions unless you sell. This is due to a tax regulation that favors the ETF.

This does not apply to Vanguard funds which have both mutual fund and etf versions of the same fund, like VTSAX and VTI. In that case the fund can benefit from the tax regulation by using the ETF, so there should be no capital gain distributions in either version.

 

[scrabbler1]

Why do you want dividends? Do you enjoy paying taxes?
Gill

As RunningBum pointed out, I was lamenting about year-end dividends not being posted, in an effort to better plan my year-end tax planning if they had been.

I am in the 0% federal tax bracket for stock or stock fund dividends, so those I pay zilch in federal taxes. Those dividends will affect my ACA subsidy, though.

 

[Amethyst]

Not the OP, but of course the answer is "No," just as I don't enjoy having my teeth drilled.

Still, as our CPA used to say, "Better to have money and pay taxes on it, than not have money."

Also, some people (though not me) live solely on investment income.

Why do you want dividends? Do you enjoy paying taxes?
Gill

 

[Amethyst]

Should I find it strange that all our VG funds show a capital loss in this very high gain year?

I seem to post this every year but you can see a Vanguard fund's potential CG Distribution throughout the year by clicking on the "Distributions" tab for that fund (not your account) and scrolling down to Realized/Unrealized Gains.

For instance, Wellington Admiral is currently showing $4.86 a share as of 9/30 with fiscal year ending 11/30. I've found that by this time of the year those numbers hold pretty true for year end cap gains estimates:

https://investor.vanguard.com/mutual-funds/profile/distributions/vwenx

 

[marko]

Why do you want dividends? Do you enjoy paying taxes?
Gill

Many of us here live exclusively on dividends and MF cap gains (and SS).

The tax treatment--to date--is quite favorable. But the pros and cons of that approach has been beaten to death here.

 

[MichaelB]

Should I find it strange that all our VG funds show a capital loss in this very high gain year?

It probably means they have moved the realized capital gains out through the ETF version. This is something only Vanguard can do because it has mutual fund and etf versions of the same investment product.

 

[marko]

. Earlier this year I estimated that those funds would have slightly above average distributions and made my Roth conversion based on those estimates.l]

Im interested in how you were able to do that. I always have to wait until October. What's your insight?

 

[FANOFJESUS]

Many of us here live exclusively on dividends and MF cap gains (and SS).

The tax treatment--to date--is quite favorable. But the pros and cons of that approach has been beaten to death here.

They are great as long as it works for the ACA. I thought I would bring the ACA horse along.