Exchanging Fund for Multiple Funds in Taxable

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Exchanging Fund for Multiple Funds in Taxable

Postby bulldog1 » Sat Jan 26, 2013 8:34 pm

Hello All-

I'm a long time lurker and I would like to say how grateful I am to this site and the people who contribute to it. Thank you all!

I currently hold Vanguard Tax-Managed Balanced in my taxable account. I've held it only for a couple months and I feel it's a mistake. My plan is to exchange all of the shares for the following:

Vanguard Total Stock Market Index Fund Admiral Shares
Vanguard Total International Stock Index Fund Admiral Shares
Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares

This will give me more flexibility and access to international equities. Since I've only held the tax-managed balanced fund for only three months, the short term capital gain will be small. From a tax reporting stand point, which scenario would be wiser.

1. Exchange all of the fund into my Vanguard money market fund, let it settle and then buy the three funds?
2. Exchange all of the fund in three different percentages directly into the funds I've listed above?

With scenario 2, would I see three transactions on my 1099-B? Am I right to think I would see only one transaction with scenario 1?

Thank you for your help,
Bulldog
bulldog1
 
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Re: Exchanging Fund for Multiple Funds in Taxable

Postby livesoft » Sat Jan 26, 2013 8:38 pm

When I did an exchange like this, I called up Vanguard on the phone and had them do what I wanted. No intermediate money market. As for 1 or 3 transactions on a 1099B, I can't recall because it really is not an issue.

The trick is to tell them "and all accrued dividends", so you are not left with any potential partial monthly bond dividend at any point.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Exchanging Fund for Multiple Funds in Taxable

Postby bulldog1 » Sat Jan 26, 2013 11:48 pm

Thanks livesoft. I'll go ahead and exchange all shares to the money market account. I just want to be safe and make sure the capital gains and dividends don't get reinvested into the new funds.
bulldog1
 
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