2023 Year-End Distributions

[scrabbler1]

As I have done the last few years, I am starting a thread where you can post any year-end (2023, this time) cap gain and dividend distributions by your brokerage company.

Here is last year's thread:

https://www.early-retirement.org/forums/f28/2022-year-end-distributions-115709.html

Fidelity's just came out for year-end 2023. Its contents may change as they add more estimates to the mix. Maybe they include dividends again?

And here are Fidelity's 2023 estimates so far:

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

I already saw some bad news, if the estimate holds up. One fund, a stock index fund, has projected a significant short-term cap gain distribution. It will cost me 11% in federal income taxes, 13% in ACA subsidy repayment, and 5.5% more in state income taxes.

I could be spared this nearly 29% marginal tax rate if the estimate ends up being too big, or if by some chance this is partially or fully consisting of a dividend distribution misclassified as a short-term cap gain, something I have seen before but not in a long time.

It's still 2 months away from being realized, so a lot can change.

 

[Retire2023]

Thanks for starting this! I'll be following updates.

 

[audreyh1]

https://mutualfundobserver.com/discuss/discussion/61500/2023-capital-gains-distribution-estimates

This^^ is a great resource for capital gains distribution estimates each year. It's a conversation on Mutual Fund Observer site, faithfully started by the same poster each year. What a service!

I found this morning already that most of my funds are paying 0%. A couple of active funds are paying less than 3% and all my index funds are paying 0%. Just waiting on one fund which will publish mid Nov.

 

[Kings over Queens]

Is it fair to say that I should only be concerned about this if/when I hold funds in my taxable account? At least from a tax/income point of view.

 

[audreyh1]

Is it fair to say that I should only be concerned about this if/when I hold funds in my taxable account? At least from a tax/income point of view.

Yes, it’s a taxable accounts issue. For some of us this information is critical to estimating our potential taxable income for the year and do relevant tax planning. In my case I try to stay within a certain IRMAA level. I will probably do some tax gain harvesting this year because it looks like my taxable income will be lower than usual. I may also redeem an older IBond. Many also use this to determine how much of a Roth conversion they can do without exceeding ACA or IRMAA limits.

Fortunately distributions are usually paid out before the end of December, but it helps to be able to plan ahead.

Staying under limits is tricky though because there are usually a few things that are reported after the end of the year such as foreign tax credit related income and interest paid on Dec 31. Figuring out a buffer and guessing at 2025 IRMAA levels is a bit of an art.

 

[Trooper]

Is it fair to say that I should only be concerned about this if/when I hold funds in my taxable account? At least from a tax/income point of view.

Yes.

 

[ER2B]

On November 13, 2023, Vanguard will release a list of funds that were expected, as of October 31, 2023, to distribute taxable capital gains in December 2023.

 

[Kings over Queens]

One thing I never considered as I contemplated retirement is dealing with how or where my money comes from. This is starting to seem like work, and I haven't even FIRE'd yet.

 

[audreyh1]

It’s pretty simple for me. We have no pensions and haven’t started SS. We’re not required to pull from our IRAs yet either. We are currently living off our taxable retirement accounts.

I simply withdraw a fixed percentage from our retirement accounts each Jan and park it in a high yield savings account or MM fund and from there it is transferred to checking accounts on an as needed basis. I don’t have to worry about cash flow during the year.

I also rebalance to a target AA after this withdrawal. That is what takes care of where the money came from.

People who have income streams such as SS, pensions, and even RMDs this is even easier if most of their spending is covered. Cash flow management can be complex, but it’s also possible to keep it very simple.

 

[Gumby]

Simple is good for many things.

 

[Car-Guy]

Yes, it’s a taxable accounts issue. For some of us this information is critical to estimating our potential taxable income for the year and do relevant tax planning. In my case I try to stay within a certain IRMAA level. I will probably do some tax gain harvesting this year because it looks like my taxable income will be lower than usual. I may also redeem an older IBond. Many also use this to determine how much of a Roth conversion they can do without exceeding ACA or IRMAA limits.

Fortunately distributions are usually paid out before the end of December, but it helps to be able to plan ahead.

Staying under limits is tricky though because there are usually a few things that are reported after the end of the year such as foreign tax credit related income and interest paid on Dec 31. Figuring out a buffer and guessing at 2025 IRMAA levels is a bit of an art.

Yes all very true, and as "unfair" (IMO) as IRMAA is, the tax penalty is really a "nit" IMO, especially for the first tier. I mean, it seems to me that any couple pulling down ~1/4m a year in taxable income, can certainly afford the extra ~1k per person/yr in medicare premiums due to IRMAA. But still I'm trying to say under the limits. Price of success I guess but it still doesn't make it right, just legal.

 

[scrabbler1]

BNY-Mellon (formerly Dreyfus) posted their year-end distribution estimates.

https://im.bnymellon.com/us/en/indiv...-distributions

 

[MichaelB]

On November 13, 2023, Vanguard will release a list of funds that were expected, as of October 31, 2023, to distribute taxable capital gains in December 2023.

Vanguard released today the preliminary estimates for capital gains https://advisors.vanguard.com/content/dam/fas/pdfs/FAPYEEST.pdf

 

[TheWizard]

Best to hold only index funds in your taxable account.
Hold managed funds in your tax-deferred and Roth accounts only.
That makes tax planning simple...

 

[MichaelB]

Best to hold only index funds in your taxable account.
Hold managed funds in your tax-deferred and Roth accounts only.
That makes tax planning simple...

Good advice, but some of us have only or mostly taxable accounts.

 

[TheWizard]

Good advice, but some of us have only or mostly taxable accounts.

I see.
But there are lots of index funds: QQQ, VGT, and MGK, for example.
It's not all total market funds.,

 

[marko]

TRPrice came out on Friday. VERY short on cap gains vs the last few years. Fido is equally sparse. We live on those MF cap gains and I'm very disappointed.

Anyone have a clue why cap gains are so low this year? For my mix, they're down almost 50%. Good news at tax time however.

 

[audreyh1]

TRPrice came out on Friday. VERY short on cap gains vs the last few years. Fido is equally sparse. We live on those MF cap gains and I'm very disappointed.

Anyone have a clue why cap gains are so low this year? For my mix, they're down almost 50%. Good news at tax time however.

time to get over this, ha ha.

There is absolutely no difference between a long term capital gain distribution and selling a bit of the fund yourself. Just decide what you need and take it. You’ll even pay less taxes because you’ll have some cost basis.

Cap gains are always low after bear market years, for a few years. Blame 2022.

 

[FREE866]

Best to hold only index funds in your taxable account.
Hold managed funds in your tax-deferred and Roth accounts only.
That makes tax planning simple...

I own only ETFS and have a taxable, an IRA and a Roth IRA


What is the benefit to having managed funds in the latter two?


thx

 

[marko]

time to get over this, ha ha.

There is absolutely no difference between a long term capital gain distribution and selling a bit of the fund yourself. Just decide what you need and take it. You’ll even pay less taxes because you’ll have some cost basis.

Cap gains are always low after bear market years, for a few years. Blame 2022.

If I have 100 shares and get a 10% cap gains, I now have 110 shares. I can sell those "new" 10 shares and end up with 100 shares. Yes the price drops by 10% but the 100 shares left can recover over time.

If I have 100 shares and get zero cap gains, I need to sell 10 shares and end up with 90 shares. Yes the price stays the same but over time I could end up with 1 share ... and that one share had better have grown to be worth a couple hundred thousand dollars!

Or am I out in the weeds as usual? Old habits die hard: "never touch the principal" has been drilled into me since childhood.

If a man owns 10 acres of land, does he sell an acre a year or does he rent out the 10 acres to a farmer and live off the rent for years to come?

Please. Enlighten me!

 

[Amethyst]

I'm actually relieved, b/c TRP New Horizons has been eviscerating itself with cap gains for years. Then again I use year-end distros to help with lumpy expenses, not living expenses, so I understand your concern.

TRPrice came out on Friday. VERY short on cap gains vs the last few years. Fido is equally sparse. We live on those MF cap gains and I'm very disappointed.

.

 

[UpQuark]

If I sell all my shares of a mutual fund, will it still give me cap gains in December?

 

[Gumby]

If you sell before the ex-dividend date, you will not receive the year end distribution. HOWEVER, if you sell your mutual fund shares for a higher price than you bought them, you will still have a capital gain. (assuming all this is occurring in a taxable account).

 

[ERD50]

If I have 100 shares and get a 10% cap gains, I now have 110 shares. I can sell those "new" 10 shares and end up with 100 shares. Yes the price drops by 10% but the 100 shares left can recover over time.

If I have 100 shares and get zero cap gains, I need to sell 10 shares and end up with 90 shares. Yes the price stays the same but over time I could end up with 1 share ... and that one share had better have grown to be worth a couple hundred thousand dollars!

Or am I out in the weeds as usual? Old habits die hard: "never touch the principal" has been drilled into me since childhood.

If a man owns 10 acres of land, does he sell an acre a year or does he rent out the 10 acres to a farmer and live off the rent for years to come?

Please. Enlighten me!

This has been done before. Yes, you are "out in the weeds" (using your terms). These forms of analysis from the div-and-cap-gains-lovers get twisted up in not fully realizing that if the divs/gains were not distributed, they would be in the value of the shares. And in the assumption that the stock just magically recovers from the ex-div price drop, and that somehow wouldn't be shared by it's twin stock that didn't distribute that div/gains.

And yes, take the case of stock twins, alike in every way, except that one has a price that increases by 10% each year (because it earned 10%), and one that distributes that earned 10% each year (so stays at the same price, as it already 'gave away' all it's earnings. And you have to sell 10% of your holdings in the non-div stock for cash flow. So at some point you end up with 1 share, but that share is worth a LOT. And the total value over time is the same. It's just arithmetic, and I think I have a spreadsheet somewhere that shows that. But if you think about it, it's actually pretty obvious w/o all the formulas. Two stocks with identical performance will have identical total values over the time - the money goes somewhere, it doesn't go 'poof'.

-ERD50

 

[CincyDave]

Here's a link for Fidelity funds that you can search for a fund instead of scrolling through their list of hundreds of non alphabetical funds.

https://institutional.fidelity.com/app/tabbed/products/FIIS_SP52_DPL6.html?navId=324