Bogleheads.org

Was the inherited account actually retitled to your parents (and to no one else)?

Is the value of all your late father's assets that didn't automatically become your mother's—because of joint registration or because she was named beneficiary of the account—less than $100,000, or whatever Illinois's current small-estate limit is?

If so, has she tried to submit a small-estate affidavit to the brokerage?

If not, has someone been appointed executor by the appropriate court? Perhaps this is the "court order" being requested. Once the executor gets letters testamentary from the court, (s)he has the legal authority to do whatever the will says to do.

(The trust has no effect on assets that have not been put into it.)

I doubt it. As she will act only as your agent, for tax purposes you will continue to receive all the benefits and all the tax consequences of the IRA.

Will you tell your future executor who the beneficiaries are? (Will Vanguard tell the executor, once named, who the beneficiaries are? Possibly the executor would have no authority over the account, since it is your intention that it should pass directly to the beneficiaries rather than going through probate.)

I am surprised that Vanguard did not send an (average) basis to Fidelity, but they were not required to keep such old records. In those days, that was your responsibility of the customer. If Fidelity was not given such records, they will not be able to provide them to you or to the IRS. (As far as I can tell, the brokerages never send basis information on non-covered shares to the IRS, but when available they provide information to you as a convenience.) Do you have any way of estimating when you purchased those non-covered shares (and how much), and did you have automatic reinvestment of dividends? If you sell them, you will really want to have something defensible to put on your tax return besides basis=$0. At Fidelity's website, you can ...

When this asset was at Vanguard, did they provide any cost basis information for you? (Note that in the old days—before the brokerages were required to keep basis records for you—Vanguard opted to provide average basis information which you could choose to use, or not.) Did you preserve your purchase records from the pre-coverage era? Have you ever sold any VTV or VVIAX (its Admiral mutual fund sibling)? Have you chosen a default lot-selection method at Fidelity? The default is FIFO (by law), but you may switch to some other method. Also, at the time of sale, you can choose specific lots. You should be able to choose to sell any of your lots (such as the recent, high-cost ones), but you will really want to have documentation for the basis t...

placeholder wrote: ↑Wed Mar 15, 2023 5:56 pm Some of the bond funds can't be converted because of the way earnings are accrued and distributed differ between the fund and the etf.

Can't be converted from mutual fund to ETF.

But you can convert your bond mutual fund account into a mutual fund held inside a brokerage account. (When you switch to a brokerage account, you are not required to convert any mutual funds into ETFs, although you may choose to do so later.)

MP123 wrote: ↑Wed Mar 15, 2023 12:30 pm Yes, you could use $3000 of the loss against your ordinary income in 2022, and carry forward the remaining $2000 to use in 2023.

The process of using the capital loss is completely determined by the tax rules; you don't get any discretion by the time it comes to file. The description is correct if that is your net capital gain/loss. If you both lost $5000 and gained $XXX, the capital loss has to be netted against the capital gain first, even if that is not to your tax advantage. Also, you must use any remaining $3000 against that year's income (as long as you have any), even if that is not to your tax advantage (such as, you would prefer to save it up for some future tax year).

tibbitts wrote: ↑Wed Mar 15, 2023 1:30 am But what did you have to transact with SSA?

Change of address.

Also, after I became my father's representative payee, all the Medicare paperwork (including the card with the newfangled number) came to me instead of being sent to him.

Why do you have trusts? Is there one for each of you? Are these revocable living trusts?

If you have your own revocable living trust, probably you should open an account to be owned by the trust, rather than one owned by you as an individual. (The trust document defines what happens after you pass away. The trust itself won't die, so there is little purpose to naming a beneficiary for any particular account owned by the trust. Note that in trust-land terms, you are the current beneficiary of your own living trust.)

Try going to "Positions" and click on whatever holds your cash (maybe it's decorated with two asterisks). That should reveal an button labelled "Change Core Position." Choose that and it should offer the alternatives (if any).

FDIC does not cover assets held in money-market funds.

Also, Fidelity does not have UMB hold your money. They are involved just to handle the transactions.

Among the credit-card crowd, this is called cycling.

you max out your credit card, pay it off and then make more charges (or even max it out again) several times in a single statement period

Reportedly some banks, including Chase, don't like it if you make it a regular practice.

If they do give you the chance to select particular lots "later,", I don't think that you should assume that you have long to do so. By comparison, when you sell shares, you have only until the settlement date to identify lots.

cas wrote: ↑Mon Mar 13, 2023 12:21 pm In this context ... the context of typical language used for trusts ... I would think that

The trust "beneficiary" is the person who is currently receiving the benefit of the trust, i.e. access to the principal and income in the case of a Revocable Living Trust. So, since you are still alive, the beneficiary is currently *you*.

I agree with this. A living trust involves three roles: grantor, trustee, and beneficiary. From the point of view of the trust, you are the beneficiary.

retired@50 wrote: ↑Tue Mar 07, 2023 5:49 pm

dbr wrote: ↑Tue Mar 07, 2023 5:46 pm VBTLX is BND. How can it not be exchanged just like any other mutual fund to ETF? But what did Vanguard say?

VBTLX is one of the few bond funds that Vanguard won't switch to the sister ETF share class in a non-taxable event transaction.

See this document.

I once read here on the forum that this is because of how they handle the dividends. In the mutual-fund version they "generally
are declared daily"; whereas in the ETF version they are declared monthly.

By the way, for a similar-but-different bond fund I'd look at BIV "Vanguard Intermediate-Term Bond ETF."

dcabler wrote: ↑Wed Mar 08, 2023 6:37 am GOIXX also appears to be managed and has a relatively short duration

GOIXX is a money-market fund. (The symbol ending in "XX" is a giveaway.)

manlymatt83 wrote: ↑Tue Mar 07, 2023 9:19 am

Suspicious-Kiwi123 wrote: ↑Tue Mar 07, 2023 9:17 am Once you buy in, you are in. For example, if you dip below $100k for FZDXX, you can still purchase more.

I could use $100k to buy it, but I’d probably be around $20-30k from there on out (as expenses come in and new cash gets deposited and I manually buy).

Wonder if Fido would shut me down at that level after a while and make me revert to a lower fund.

The prospectus for FZDXX says, "If your fund balance falls below $10,000 worth of shares for any reason and you do not increase your balance, Fidelity may sell all of your shares and send the proceeds to you after providing you with at least 30 days' notice to reestablish the minimum balance."

I found out that Maryland is one of 6 states that has a 10% inheritance tax if you are not an immediate family member It is currently only imposed on collateral heirs like a niece, nephew or friend. Certain heirs, like parents, grandparents, children, stepchildren, children’s spouses, brothers or sisters, are not currently taxed, although they have been taxed in the past. So if you are a Maryland resident at the time of your death but the beneficiary is a resident of another state, does that mean they are exempt from it? I don't think so. According to the website of some Maryland lawyer, whoever distributes the estate is supposed to pay the inheritance tax before the beneficiaries get it. Be aware that Maryland also has an estate tax.

rich126 wrote: ↑Mon Mar 06, 2023 3:06 pm Are there significant differences in terms of taxes when someone is a beneficiary of retirement accounts or other assets if they are:
1. Sibling
2. Niece or Nephew

I just had to go through this as a child inheriting money from a parent I understand how that works but are things significantly different in the cases above?

For federal estate tax, there is no difference. But some states impose estate or inheritance taxes (or both), and then there may be a difference. For example, Pennsylvania makes distinctions among direct descendants, siblings, and others.

It looks like at TD Ameritrade you can buy the money-market funds from Schwab (which now owns TDA). Note that some of them have high minimum purchases.

Shouldn't tax matters within the trust be handled (in the first instance) within the trust? In that case, if the trust is distributing the tax responsibility to the beneficiaries, it should issue them K-1s.

ssn wrote: ↑Sun Mar 05, 2023 7:03 pm 1. Do the Fidelity CDs give simple interest & if I go directly to retail bank, do they give compound interest?

Fidelity's and all "brokered" CDs pay simple interest. Probably the ones sold directly by banks pay compound interest, but that is not required.

(The regular Interest payments from brokered CDs go into your Fidelity cash balance. You should expect them to pay some interest on that balance.)

2. Someone mentioned treasuries with no state tax. What is the specific type (sorry, newbie here)?

All of the bonds issued by the US Treasury.

Kelly wrote: ↑Sun Mar 05, 2023 2:15 pm why does a treasury MM fund state "Typically invests in securities backed by the full faith and credit of the U.S. government and repurchase agreements backed by such investments" and also says "may lose value?" Which is it?

They are required to make statements like "may lose value" because it is literally possible that even Treasury securities may end up with reduced or no value. If that happens, you should not expect any one to step in to make up any losses.

By my reading of the rules: If you don't want to sell particular items, but don't want to risk losing an unrealized capital loss, then either (1) transfer only items with gains, or (2) wait until you are married.

whohasaquestion wrote: ↑Sat Mar 04, 2023 8:47 am Btw, do you know why I can buy VUSXX from Etrade but not Fidelity?

Because in the case of mutual funds, each broker and each fund provider have to work out an arrangement for a fund to be held at the broker. Apparently Fidelity has not been motivated to work this out with Vanguard, while ETrade has.

I am not sure in what context the "process" would supersede the intent that this is a gift (but perhaps I don't have the right experience). I doubt that it matters whether the transfer is done as a pull from A to B, versus a push from B to A.

If pulling from A to B seems preferable, then likely the method most compatible with the banks is for your wife to get online access at A and perform the transfer under her own name. She should be allowed to do this if she is a (joint) owner.

To me it sounds like this is not a taxable transaction. However, I don't think that it's considered to be a "distribution" officially, either.

Typically, if an external bank (B) is added to someone (i.e., the parents') account (A), the account owner (of A) doing the adding agrees that he or she has the right to transact on the account at the external bank (B). Thereafter, the account owner (of A) is free to do any ACH transfer to or from that external bank (B).

However, it sounds like no owner at the external bank (B) is an owner of the account (at A). Also, do you really want the account owners (of A) to have unlimited transaction rights at the external bank (B)?

Sandi_k wrote: ↑Fri Mar 03, 2023 1:56 pm Should I be worried that the brokerage account isn't FDIC insured?

I guess if I want that coverage, I need to open the CMA - can I still get SPAXX in that account? (I assume not).

In the CMA, the default place for cash is FDIC insured; it doesn't pay as much as a money-market fund. You can buy money-market funds in the CMA instead, but they aren't FDIC insured.

SPAXX and its sibling FDRXX keep money in government bonds and the like. They are considered pretty safe, even though not all of those bonds enjoy the absolute government guarantee. There are also FZFXX and FDLXX, Treasury money-market funds, which keep money in bonds issued by the US Treasury (and closely related assets).

Well, I read this as immediate tax consequence. I'm talking about the whole process: sending stocks to her account, then send it back to my account after however many years. There will no selling by the SO, none, so, less complication. From what I read from you, both options are bad: 1) If I transfer stocks with gain, I will be taxed. 2) If I transfer stocks with loss, the cost basis will increase, I will lose unrealized loss. Isn't there a good option? Are you 100% sure about option 2. This contradicts with the previous poster's message about no cost basis change. By "immediate" I mean "affecting your return this (tax) year." If you transfer some stocks, no one's income tax return is affected until those shares are sol...

whohasaquestion wrote: ↑Tue Feb 28, 2023 8:51 am The thing I like about VUSXX is that the dividend is free of state income tax. However, Is it paid out as a qualified dividend or long-term capital gain (assuming hold time > 1 year) for federal tax purposes?

The dividend is not qualified. There should be zero (long-term) capital gain distribution. The assets that this fund owns are not eligible for such federal tax preferences.

There are many other designs including standing and three wheel now. Factor to consider are walking ability, ability to lift feet/presence of neuropathy or edema, weight, very tall or very short, posture, dexterity to be able to use hand brakes, personal preference, what will fit in the living quarters, ability to fold to put in car. So there is no single best because people have different needs. I do still see the two wheeled models with two tennis balls on the rigid legs, too, but I don't understand why people still do this when there are much better choices now. Besides the considerations of flexibility, dexterity, and balance that make the models with two wheels plus two rigid legs preferable for some people, I believe that in some (or...

I offered to give my SO the 100K in the form of stocks that I own, to be used for funding the new ME account. But I haven't thought much about stock ownership changes and tax consequences after this happens. A couple of questions here: 1) Now: When I send 100K to her ME account in the form of stocks, do I get taxed (now, before marriage and before we can file taxes together), and do the stocks get new cost basis based on FMV? There is no immediate income tax consequence from giving the gift to or receiving the gift from a non-spouse. If the FMV is higher than your basis, the recipient gets your basis. If the FMV is lower than your basis, then things are more complicated : If the future owner wants to sell the asset in order to realize a ca...

Real estate gets a step up in basis on death, so no taxes are due. https://www.investopedia.com/terms/s/stepupinbasis.asp#:~:text=Step%2Dup%20in%20basis%2C%20or,the%20asset%20is%20sold%20later. Step-up in basis, or stepped-up basis, is what happens when the price of an inherited asset on the date of the decedent's death is above its original purchase price. The tax code allows for the raising of the cost basis to the higher price, minimizing the capital gains taxes owed if the asset is sold later. But if there was a long time between date of death and sale date, then it may not be reasonable to argue that that the sale price represents the value on date of death. (Also, the tax code requires that the basis be reset, even if it is not a ste...

It sounds like something has gone wrong. Do you know what is being produced for the IT203 (especially pages 2 and 3)?

I own shares of FCRD (First Eagle Alternative Capital BDC), which is being acquired by CCAP. I have a short-term capital gain on FCRD. I can elect to receive shares of CCAP or cash. Can I defer the capital gain by electing to receive shares? I am not sure I understand what the SEC filing says about this: If the Mergers qualify as a reorganization for U.S. federal income tax purposes, U.S. stockholders ... who receive a combination of shares of CCAP Common Stock and cash ... will recognize gain (but not loss) in an amount equal to the lesser of (i) [some calculation] and (ii) the amount of cash ... received by such holder .... A U.S. stockholder will also recognize gain or loss attributable to any cash received in lieu of a fractional share...

DDDDD wrote: ↑Wed Feb 22, 2023 6:52 pm  Which state does he use to file his state tax return?  Is he a Colorado resident?  He has not lived in California, at all in 2022. Is he a California resident?

Many states take the position that people don't stop being their (tax) resident until they establish domicile somewhere else.

Note that each state makes its own rules, so it is conceivable to be a tax resident of multiple states at the same time.

seawolf21 wrote: ↑Wed Feb 22, 2023 7:45 am Definitely not standard with Hertz/National/Avis.

Don't these three companies, their subsidiaries, and corporate siblings have more than 90% of the market, though? When people complain about some particular car-rental brand, they are probably naming a subsidiary of one of just three holding corporations.

sungchiahao wrote: ↑Tue Feb 21, 2023 6:09 pm I hold Vanguard mutual funds and ETF in my taxable account. I believe if I transfer in-kind to Fidelity, there's no fee to hold them, but is there fees for dividend reinvestment? And fees to tax-loss harvest sell. Does anyone have success getting fees waived?

No fee for dividend reinvestment or for selling; however, some Vanguard mutual funds are not eligible to be held at Fidelity.

There's the bid-ask spread, which (although you pay it just once) could be comparable to many months' worth of expenses.

nextmilenium wrote: ↑Mon Feb 20, 2023 11:49 am Let's say I make some IRA distribution (intended as supplementary income), pay taxes on it, but end up not spending it all so it sits in my savings account. Let's assume it gains some interest. Do I pay tax on the interest gained?

If the interest is paid on money that's outside your IRA—which would be the case if it came from an IRA distribution—then that is taxable income.

The dollars that came from your IRA are just like any other dollars you have in your regular savings. There is no special label for ex-IRA dollars, and no special tax benefits for them (except that, I believe, once a year you can put the money back into an IRA or the like within the first 60 days).

Mantenerelrumbo wrote: ↑Sun Feb 19, 2023 11:32 pm According to supermoney.com VTSAX has a tax-cost ratio (measured as how much a fund’s annualized return is reduced by the taxes investors pay on distributions) of 0.70%, while VTI has a tax-cost ratio of 0.49%. Therefore, VTI is the more tax-efficient option.

supermoney doesn't show or explain their calculation, although they say, "As a mutual fund, VTSAX generates more capital gains, resulting in higher income tax and forcing investors to pay capital gains tax. Since ETFs are usually index based, they generate fewer taxable capital gains."

The Bogleheads wiki says that VTSAX didn't throw off any capital gains from 1992 to 2019, and it looks like it hasn't distributed capital gains since then either.

Mantenerelrumbo wrote: ↑Sun Feb 19, 2023 10:49 pm

kstrek wrote: ↑Sun Feb 19, 2023 10:13 pm ... VFIAX (VG 500 Index Fund Admiral Shares)
... VTIAX (VG Total Intl. Stock Index Fund Admiral Shares)
... VBTLX (VG Total Bond Market Index Fund Admiral Shares)

ETFs tend to be more tax efficient. Take a look at VTI and VOO instead.

You can choose VFIAX (mutual fund shares) or VOO (exchange-traded fund shares): these are different ways to buy the same fund. Similarly with VTIAX (MF) and VXUS (ETF). And also with VTSAX (MF) and VTI (ETF).

Vanguard has a unique process that allows the mutual-fund versions of these funds to share the tax-efficiency feature of the ETF versions. So tax efficiency is not a reason to shun the Vanguard mutual funds.

In any case, if you set beneficiaries is not better for all types of accounts? Don't you avoid probate? And to be paranoic, what happens if by mistake the beneficiary and the inheritor per the will/trust is different? Assets in the trust are handled according to the trust document, but if you set a non-trust beneficiary, then presumably you don't want your trust to be involved. Assets with named beneficiaries go to the beneficiaries, and your will (etc.) should not be involved. If you name people as beneficiaries of accounts who are not the same as in your will, it is assumed that was your intention, even if you chose your account beneficiaries and made the rest of your estate plans at completely different times of your life. So if you car...

I'm somewhat surprised that Fidelity's PoA forms (see here, here, and here) don't seem to ask about net worth, although they do ask about source of income.

Typically when a marriage tax penalty is mentioned, it's a married-vs.-two-single-filers difference that's being pointed out. But you can't take advantage of paying tax like a single person by choosing to file married-separate. You need to be actually unmarried.

It seems the common thread here is to have a will that would (by definition) go through probate, and assuming it went well, the judge would recognize my desire to name my friend as my authorized agent, and provide some court order type document bestowing this magical authority upon them. All at a "cost" of going to court, where things may now be public information, and potentially lengthy, especially if assets are over this "small" estate value. If your estate that would be probated—which excludes any assets in trust and any assets with named beneficiaries—is "small" by California's definition, then your friend does not have to go to court, see a judge, hire a lawyer, produce the will, get an official appointm...

UpperNwGuy wrote: ↑Tue Feb 14, 2023 7:23 am Is SPRXX pure treasuries, or does it also contain repos?

Looks like SPRXX is about 46% repurchase agreements. And 1% Treasurys. It's not meant to be a government or Treasury fund at all.

For (mostly) Treasurys, you want Fidelity Treasury Only Money Market Fund (FDLXX).

In California, a will does not force a lengthy procedure involving the court if the estate that would be subject to probate is "small" and can be handled via affidavits. You assign your trusted friend most of these duties by nominating him or her as your executor. This works even if your friend doesn't have to go to court to get letters testamentary, etc. A waiting period of several weeks is required before using the affidavits, but it may take weeks to get the required death certificates anyway. (I am not sure whether your non-relative friend is even authorized to get certified death certificates without being the person who would have officially been appointed executor by the court.) I believe that authorization to make funeral ...

dave1054 wrote: ↑Wed Feb 08, 2023 10:18 am I hold some Vanguard ETFs with Fidelity. They claim they are waiting for information from Vanguard before issuing the tax forms. Is there any requirement to issue a 1099 by a certain date? I would like to get started on my taxes, but this seems to be holding everything up.

If 1099s are issued incorrectly, then they have to issue corrected ones later. Isn't it arguably worse if you have to go back and re-do your taxes because you had incorrect data earlier?