No. Roth contributions have to be in cash.With my wife still working I am able to fund my ROTH $8000 each year. Can I call Fido and use those funds with a lot of LTCG and tranfer the shares to my Roth?
Probably need to set aside more than 15% if the ACA premium tax credit is affected. Roth Conversion and Capital Gains On ACA Health Insurance is a good resource.I could sell like 10K worth of shares each year and have about 4.5K in LTCG as a result. That wouldn't be enough extra income to have any significant impact on things overall (ACA subsidy, etc.). I would set aside 15% of the gain for taxes and use the rest for spending.
You didn't say what your spending requirement was or if you had any other income. If you can live off that $198K, just sell the entire fund for a $0 federal tax. Pretty easy stuff. We are trying to build a house so we have a huge income requirement. I'm leaving all my big LTCG stocks (we have a ton at 3300% profit) for future years where selling that will be my only income (with zero tax). Don't forget about state tax when you do this. I got hit for late fees one year because I screwed that up.How do I best approach starting to sell off some of those holdings? For example, we own one fund that is worth about 198K of which around 90K is gains if we were to sell it all today.
Do I just start selling it off gradually to not take too big a tax hit in any one year?
How could I have zero tax on $90,000 in capital gains?If you can live off that $198K, just sell the entire fund for a $0 federal tax. Pretty easy stuff.
Search for zero LTCG. There are a ton of articles on it that explain much better than I can. Here is an example: https://www.cnbc.com/2023/11/14/how...d-still-pay-0percent-capital-gains-taxes.htmlHow could I have zero tax on $90,000 in capital g
How could I have zero tax on $90,000 in capital gains?
I have heard about that but never looked into the details. Thanks. The hard part is there's no way to know what our CGs will be for the year until late December when funds pay out their distributions. I guess once that happens, I'd have a few days to sell anything I want to and still be under that limit.There is a 0% LTCG bracket up to $89,250 for MFJ. Add on the $29,200 standard deduction and you have zero tax on $118,450 of LTCG, assuming no other income.
Starting usually in October, many fund companies start providing estimates of what they will be paying out in CGs later in the year. That might give you a few more months of planning time to see the impact and then decide what the appropriate action will be. We usually have threads here that pop up in October on that topic, and there is another site referenced by these threads, which I am too lazy to search for now, that tracks all companies releasing that information.I have heard about that but never looked into the details. Thanks. The hard part is there's no way to know what our CGs will be for the year until late December when funds pay out their distributions. I guess once that happens, I'd have a few days to sell anything I want to and still be under that limit.
We have other taxable income so I'd have to balance that all out. And the final numbers aren't known until the end of the year.
Starting usually in October, many fund companies start providing estimates of what they will be paying out in CGs later in the year. That might give you a few more months of planning time to see the impact and then decide what the appropriate action will be. We usually have threads here that pop up in October on that topic, and there is another site referenced by these threads, which I am too lazy to search for now, that tracks all companies releasing that information.
Looks like you're talking about Capital Gains Distributions (CGDs).I have heard about that but never looked into the details. Thanks. The hard part is there's no way to know what our CGs will be for the year until late December when funds pay out their distributions. I guess once that happens, I'd have a few days to sell anything I want to and still be under that limit.
We have other taxable income so I'd have to balance that all out. And the final numbers aren't known until the end of the year.
I understand that but 30+ years ago when we started investing index funds weren’t nearly as prevalent as they are today and ETFs weren’t around at all. We’ve got 6 figures in managed funds in taxable accounts. We haven’t added to them for many years as we shifted to index funds but we still own them.Looks like you're talking about Capital Gains Distributions (CGDs).
These generally come from managed funds, not index funds.
For most people, it's best to hold only index funds in your taxable account. If you want to hold managed funds, hold them in tax-deferred and Roth accounts.
In that situation, with no CGDs in taxable, you can do Tax Gain Harvesting at any point during the year, typically around the time indices are pushing all time highs.
Hope this helps...
Yep. I have followed those threads. They are helpful but not 100% plus we have other income. I won’t know my exact year-end eBay income, for example, until midnight on 12/31. I’d be fine with a close enough estimate though.Starting usually in October, many fund companies start providing estimates of what they will be paying out in CGs later in the year. That might give you a few more months of planning time to see the impact and then decide what the appropriate action will be. We usually have threads here that pop up in October on that topic, and there is another site referenced by these threads, which I am too lazy to search for now, that tracks all companies releasing that information.
Index funds still pay out dividends (mostly qualified), usually a very small percentage, so these contribute to your AGI and reduce the amount for capital gains to stay within the 0% cap gains tax threshold.Looks like you're talking about Capital Gains Distributions (CGDs).
These generally come from managed funds, not index funds.
For most people, it's best to hold only index funds in your taxable account. If you want to hold managed funds, hold them in tax-deferred and Roth accounts.
In that situation, with no CGDs in taxable, you can do Tax Gain Harvesting at any point during the year, typically around the time indices are pushing all time highs.
Hope this helps...
Over many years I’ve been reducing the managed funds in our taxable account as opportunities arise.I understand that but 30+ years ago when we started investing index funds weren’t nearly as prevalent as they are today and ETFs weren’t around at all. We’ve got 6 figures in managed funds in taxable accounts. We haven’t added to them for many years as we shifted to index funds but we still own them.
Bingo. Optimize the best you can, but beyond avoiding income reporting requirements, you will never report 0 for the ole LTCG coming out of your taxable. Maybe part of the "home of the brave" part of the song?If you don't need the money leave it to heirs and they will get a stepped up basis at death.
I file this under the "If I knew then what I know now" category.Over many years I’ve been reducing the managed funds in our taxable account as opportunities arise.
Well you still can, bit by bit.I file this under the "If I knew then what I know now" category.
That’s the plan.Well you still can, bit by bit.
When one dies WHO does the step up basis? Is something Fido, Schwab or VG does after they are notified?I have about 500K in QQQ with a basis of $50K. In Texas when one spouse dies the other gets stepped up basis at that time. So, our plan is to not touch this until the first dies.
When one dies WHO does the step up basis? Is something Fido, Schwab or VG does after they are notified?
Just to be clear, this is based on taxable income and not adjusted gross income, correct? If the former, that's good news. Our taxable income for 2023 was just under 105K and will definitely be lower for 2024 since I'm retiring in a few weeks. We should be able to stay under $94,050. It would be great if we could sell off a chunk of taxable holdings without triggering Federal capital gains tax. We'd still have state taxes to deal with but that's a lot better than Fed and state.Search for zero LTCG. There are a ton of articles on it that explain much better than I can. Here is an example: https://www.cnbc.com/2023/11/14/how...d-still-pay-0percent-capital-gains-taxes.html