Bill Me Later

[Bill Me Later]

Hi Everyone,
My name is Bill.
I'm retired 7+ yrs with pensions and Social Security. No need for steady flow of income (yet). I remember this site from many years ago when I was first thinking about retirement. I posted this over on CEF Holdings thread but reposting here for the rest of you.

Yes, I am new here, following @dickoncapecod, cheris, and many of you over from Fidelity. Thank you all for your valuable insights. I love learning and you CAN teach an old dog new tricks.
I have invested in PDI, PDO, PAXS for a year now, and just created an Roth IRA and have a few questions.

RE: taxable acct - Are monthly divs considered short term capital gains? What about dividend reinvestments?
With choices between a taxable account, an IRA account, and a Roth account to invest, which is the best for these CEF's?
If you have a choice, when is the better time to buy, the day before or the day after the distribution date?
I think I have the answers to some of this but wanted everyone's input.

 

[engineernerd]

Welcome, Bill Me Later. Love that moniker!

I'm not sure about the specifics of those funds, but dividends are taxed as ordinary income unless they are "qualified dividends," in which case they are taxed the same as long-term capital gains.

I think PIMCO funds are generally bond funds; I'm pretty sure bond funds do not throw off qualified dividends, those only come from U.S. stocks. So the best place to keep them is probably an IRA. But might want to check with PIMCO about whether any of those funds generate qualified dividends (and if so, what percent of the total dividends are qualified).

 

[MichaelB]

RE: taxable acct - Are monthly divs considered short term capital gains? What about dividend reinvestments?
With choices between a taxable account, an IRA account, and a Roth account to invest, which is the best for these CEF's?

Those CEFs invest in fixed income, so the distributions are treated as ordinary income. Better off in a tax deferred account. Sale applies for dividend reinvestment.

 

[Out-to-Lunch]

Welcome aboard!

 

[pb4uski]

Hi Everyone,
My name is Bill.
I'm retired 7+ yrs with pensions and Social Security. No need for steady flow of income (yet). I remember this site from many years ago when I was first thinking about retirement. I posted this over on CEF Holdings thread but reposting here for the rest of you.

Yes, I am new here, following @dickoncapecod, cheris, and many of you over from Fidelity. Thank you all for your valuable insights. I love learning and you CAN teach an old dog new tricks.
I have invested in PDI, PDO, PAXS for a year now, and just created an Roth IRA and have a few questions.

RE: taxable acct - Are monthly divs considered short term capital gains? What about dividend reinvestments?
With choices between a taxable account, an IRA account, and a Roth account to invest, which is the best for these CEF's?
If you have a choice, when is the better time to buy, the day before or the day after the distribution date?
I think I have the answers to some of this but wanted everyone's input.

Monthly dividends are generally dividend income, not short-term capital gains. Even if you have dividends automatically reinvested, it is still income and no different than if you receive that income and spend it rather than reinvest it.

Since I don't have CEFs, I'll leave that for others to answer, but in a Roth IRA all income and gains are tax free and in a traditional IRA all income and gains are tax deferred until withdrawn, at which point is is ordinary income. One thing to be aware of is if you have long-tern capital gains in a traditional IRA, when it is withdrawn it will still be ordinary income. that is one of the reasons why putting equities in a traditional IRA or 401k is suboptimal.

 

[Dtail]

Welcome to our wonderful forum.

 

[Koolau]

Welcome to FIRE Forum. I too like your screen name. I hope you participate often.