ACA and capital gains?

[Murf2]

Hello all, I have a few questions about the subject.
This is the first year I’m going to need to withdraw from my brokerage account. The account is setup with “average” cost basis. This account is at Vanguard, if that matters.

1. Are the capital gains on the money I withdraw the only part that counts as income for ACA?

2. With this account using average cost basis, If I withdraw 1/2 of the account total would 1/2 of the capital gains be my income?

3. Are the capital gains numbers shown on the Vanguard app accurate enough to use for this sort of income planning?

Thanks in advance!
Murf

 

[RunningBum]

Hello all, I have a few questions about the subject.
This is the first year I’m going to need to withdraw from my brokerage account. The account is setup with “average” cost basis. This account is at Vanguard, if that matters.

1. Are the capital gains on the money I withdraw the only part that counts as income for ACA?

2. With this account using average cost basis, If I withdraw 1/2 of the account total would 1/2 of the capital gains be my income?

3. Are the capital gains numbers shown on the Vanguard app accurate enough to use for this sort of income planning?

Thanks in advance!
Murf

Yes to all 3, and #3 is "very accurate". If you haven't withdrawn at all, I'd recommend switching to "Specific ID" so that you can choose which shares to sell. Usually you'd like to sell those with a higher basis, and less capital gains. But if you've already withdrawn any at average cost you have to stick with that.

 

[Murf2]

Thanks RB, I thought I had it right. I just didn’t want to screw it up.

If I want to change to Specific ID, do I need to have some records in my possession or is that all available online?

I’m afraid I’ve been sloppy in my record keeping. [emoji3526]

Thanks again!
Murf

 

[walkinwood]

Regarding #3,
https://investor.vanguard.com/taxes/cost-basis/covered-noncovered
Vanguard's data is only accurate for mutual fund if you use the average method. It may be your only option if you don't have all your records.


If you have sold any shares of a mutual fund using one of the cost basis methods (say average cost), then you must continue to use that method for that fund. If you've never sold a share then you have the flexibility to change the method.

 

[RunningBum]

There are covered and non-covered shares, representing when fund companies had to track your basis or not. I think the split was around 2011, and VG splits your holdings out when you look at cost basis for a holding you own. I don't have all the records for non-covered (old) shares, so I use average cost for those. To use another method I'd have to have my purchase records. Any covered shares you can just change it online, under account maintenance I think, and VG has all of the necessary records.

 

[Murf2]

Thanks again guys!

Murf