walkinwood
Thinks s/he gets paid by the post
I have an active mutual fund in a taxable account that has been under performing its index in recent years by anywhere from 1 to 2% a year. I have owned this fund for years and years and have a lot of capital gains.
My plan is to sell it in stages so that I stay in the 15% income bracket and pay no capital gains taxes. It will probably take 4-6 years to do that since it depends on what other dividends are being realized.
If I sell it off all at once and pay a 15% tax on the proceeds, it will take the index fund account (now with 15% less assets) anywhere from 10 to 18 years to overcome the inertia of doing nothing. (outperforming by 1 to 2% annually).
I don't think I'll qualify for PPACA subsidy, and even if I do, it will be very small - so I'm not taking that into consideration at all.
I am 14 years away from needing to take RMDs, so I think making the change to the index fund is probably a better bet than doing IRA to ROTH conversions. I do not base this on any hard calculations, but on the reasoning that I will be better off with the additional (big assumption) earnings from the index fund over 14 years. Index funds also distribute less than the active fund, which means more control on my annual income.
I do not want to take any future tax changes into account that aren't already law.
Care to comment or advise?
My plan is to sell it in stages so that I stay in the 15% income bracket and pay no capital gains taxes. It will probably take 4-6 years to do that since it depends on what other dividends are being realized.
If I sell it off all at once and pay a 15% tax on the proceeds, it will take the index fund account (now with 15% less assets) anywhere from 10 to 18 years to overcome the inertia of doing nothing. (outperforming by 1 to 2% annually).
I don't think I'll qualify for PPACA subsidy, and even if I do, it will be very small - so I'm not taking that into consideration at all.
I am 14 years away from needing to take RMDs, so I think making the change to the index fund is probably a better bet than doing IRA to ROTH conversions. I do not base this on any hard calculations, but on the reasoning that I will be better off with the additional (big assumption) earnings from the index fund over 14 years. Index funds also distribute less than the active fund, which means more control on my annual income.
I do not want to take any future tax changes into account that aren't already law.
Care to comment or advise?