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Another converting funds / avoiding capital gains / taxable event post
Old 04-16-2021, 06:05 PM   #1
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Another converting funds / avoiding capital gains / taxable event post

Here is another post regarding wanting to convert existing 401K/Rollover IRA funds (FIDO) to a 3 fund portfolio and avoid any taxable events during the transactions. I did do some searching within the forums and was not able to find a definitive answer. Thanks for your responses. Greatly appreciated.

Details: All tax deferred at FIDO - One Megacorp including previous mergers.

Accounts: Megacorp 401K (dated funds), Brokeragelink tied to 401K (no action here), Rollover IRA (dated funds).

My plan is to convert my current dated fund holdings to FIDO's Equity Index and Bond Index funds based on my set AA. Started a transaction today but decided to stop until I was sure I wasn't going to get myself into tax trouble before I needed to. Will call FIDO if needed but haven't spoken with anyone there in over 5 years.

Thanks in advance!
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Old 04-16-2021, 06:20 PM   #2
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I don't see any relation between how much to convert and what your AA is. Convert based on maximizing your portfolio as best you can predict for your lifetime. Set your AA separately, and then position those assets in your accounts tax effectively. https://www.bogleheads.org/wiki/Tax-...fund_placement is a very good source for where to hold different types of assets.
Sorry, you used "convert" a few times and I thought you meant you were doing Roth conversions. 401K->tIRA or tIRA->tIRA is a rollover, and there should be no tax consequences.

I rolled an IRA into a VG IRA and I found it easiest to call VG and have them guide me through it. That was 10 years ago.
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Old 04-16-2021, 07:01 PM   #3
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Quote:
Originally Posted by georgemoe View Post
Here is another post regarding wanting to convert existing 401K/Rollover IRA funds (FIDO) to a 3 fund portfolio and avoid any taxable events during the transactions. I did do some searching within the forums and was not able to find a definitive answer. Thanks for your responses. Greatly appreciated.



Details: All tax deferred at FIDO - One Megacorp including previous mergers.



Accounts: Megacorp 401K (dated funds), Brokeragelink tied to 401K (no action here), Rollover IRA (dated funds).



My plan is to convert my current dated fund holdings to FIDO's Equity Index and Bond Index funds based on my set AA. Started a transaction today but decided to stop until I was sure I wasn't going to get myself into tax trouble before I needed to. Will call FIDO if needed but haven't spoken with anyone there in over 5 years.



Thanks in advance!

If you rollover your 401k directly into a traditional IRA, there is no taxable event. If you removed the funds from the 401k into a taxable brokerage account or into a Roth IRA, it would be taxable. As stated above, asset allocation in retirement accounts do not affect taxes.
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Old 04-16-2021, 07:30 PM   #4
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What are "dated funds"?
Never heard of such a thing...
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Old 04-16-2021, 07:34 PM   #5
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Originally Posted by TheWizard View Post
What are "dated funds"?
Never heard of such a thing...

I think he means Target Date funds.
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Old 04-17-2021, 05:24 AM   #6
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If you rollover your 401k directly into a traditional IRA, there is no taxable event.
+1

OP - selling funds in such an account does not result in capital gains taxes.
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Old 04-17-2021, 05:37 AM   #7
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The way I read the OP, I don't think he's wanting to do any rollover or conversion of any type. He simply wants to change the funds that he's currently invested in in his existing 401k and existing Rollover IRA.

IF this is the case, then the OP can buy and sell as much as they want within the same accounts (i.e. no money is leaving the 401k or leaving the Rollover IRA) with no tax consequence. Selling one fund to buy a different one inside each of these accounts is not a taxable event.
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Old 04-17-2021, 06:15 AM   #8
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Originally Posted by PaunchyPirate View Post
The way I read the OP, I don't think he's wanting to do any rollover or conversion of any type. He simply wants to change the funds that he's currently invested in in his existing 401k and existing Rollover IRA.

IF this is the case, then the OP can buy and sell as much as they want within the same accounts (i.e. no money is leaving the 401k or leaving the Rollover IRA) with no tax consequence. Selling one fund to buy a different one inside each of these accounts is not a taxable event.
Apologies for my poor/over explanation. Paunchy answered my question. Thank you!
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