Guys, I know this is basic and I have been reading as much as I can on the search, but I just want to get clear answers on my case specific questions. I even called Vanguard and got 2 different answers on some of these...
1) I own a Total Stock Index Fund, and Total Bond Market fund, and both are in my "Taxable" category on Vanguard. If I've had these funds for quite some time, and then I sell the Total Bond Market Fund buy buy Total Stock Index Fund shares, has a taxable event occurred? Vanguard rep #2 told me NO because I am not receiving any cash in my hand.
2) I have a Roth 401K balance from a previous employer. I want to roll this into an existing Roth IRA at Vanguard -- will this money be taxed? Vanguard requests the "cost basis" here -- why? Why is that relevant? Am I losing any money due to transaction fees/taxes by doing this Roth 401K to a Roth IRA?
Some General Investing Questions
Re: Some General Investing Questions
Responding to no. 1- If you made a profit on the sale of the Total Bond fund, they you would owe taxes. The Vanguard site will show you if you have either a current gain or loss.
Re: Some General Investing Questions
1. You will pay capital gains taxes on the gains if there are any.
2. No tax. I don't know why they want cost basis. I can't answer about the fees at your current 401k but the Roth at Vanguard will have no costs other than expense ratios if you're using Vanguard funds. You might have costs in selling your current holdings and it might be cheaper to liquidate before the rollover.
2. No tax. I don't know why they want cost basis. I can't answer about the fees at your current 401k but the Roth at Vanguard will have no costs other than expense ratios if you're using Vanguard funds. You might have costs in selling your current holdings and it might be cheaper to liquidate before the rollover.
Re: Some General Investing Questions
It is quite worrisome that a Vanguard rep said it was non taxable.
Re: Some General Investing Questions
1. Well, technically it is a reportable event to the IRS. Can't say if you will actually owe taxers.mega317 wrote: ↑Wed Dec 13, 2017 3:22 pm 1. You will pay capital gains taxes on the gains if there are any.
2. No tax. I don't know why they want cost basis. I can't answer about the fees at your current 401k but the Roth at Vanguard will have no costs other than expense ratios if you're using Vanguard funds. You might have costs in selling your current holdings and it might be cheaper to liquidate before the rollover.
2. I bet they are looking for the pre-tax contribution basis of cash put into the Roth IRA, not the tax basis of the current positions.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Some General Investing Questions
There are reportable events and then there are taxable events. Often they are one and the same but not necessarily. OP might have a LTCG, or maybe a short term capital gain, or maybe a capital loss. Maybe the gain is not taxable, as you suggest with the 0% LTCG. Maybe the OP has differed losses floating about. Too many variables to say if it will be a taxable event. All I can say is that it will be reported to the IRS.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Some General Investing Questions
stroopwafel wrote: ↑Wed Dec 13, 2017 2:47 pm Guys, I know this is basic and I have been reading as much as I can on the search, but I just want to get clear answers on my case specific questions. I even called Vanguard and got 2 different answers on some of these...
1) I own a Total Stock Index Fund, and Total Bond Market fund, and both are in my "Taxable" category on Vanguard. If I've had these funds for quite some time, and then I sell the Total Bond Market Fund buy buy Total Stock Index Fund shares, has a taxable event occurred? Vanguard rep #2 told me NO because I am not receiving any cash in my hand.
That reasoning is dead wrong, but the only disturbing thing about it is asking Vanguard for tax advice, which they have no business giving and you have no business asking them.
2) I have a Roth 401K balance from a previous employer. I want to roll this into an existing Roth IRA at Vanguard -- will this money be taxed? Vanguard requests the "cost basis" here -- why? Why is that relevant? Am I losing any money due to transaction fees/taxes by doing this Roth 401K to a Roth IRA?
It might be an issue of what can potentially be withdrawn within five year limits: https://www.schwab.com/public/schwab/in ... awal_rules I am less clear on why the broker has to know, but it may be about whether or not they should withhold from a distribution that in fact is taxable.