Percentage of VWITX subject to AMT

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phisher4
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Percentage of VWITX subject to AMT

Post by phisher4 » Fri Jan 12, 2018 9:54 am

I'm having trouble determining what percentage of Vanguard's VWITX fund (Vanguard Intermediate Term Tax-Exempt) is subject to the AMT (alternative minimum tax). As you all may know, bonds which are classified as "private activity bonds" are subject to the dreaded AMT, thereby making funds which have private activity bonds less attractive to taxpayers who are subject to the AMT.

I really appreciate the advice of the boglehead community, and also any alternatives to VWITX for AMT-payers. :sharebeer :sharebeer

rkhusky
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Re: Percentage of VWITX subject to AMT

Post by rkhusky » Fri Jan 12, 2018 9:58 am

VWITX hasn't had PAB's for as long as I've owned it. The High Yield Tax Exempt had some.

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indexfundfan
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Re: Percentage of VWITX subject to AMT

Post by indexfundfan » Fri Jan 12, 2018 9:59 am

Several years ago, Vanguard eliminated private-activity bonds to all of its tax-exempt bond fund line-up, except for the high yield tax exempt fund and money market funds.
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SlowMovingInvestor
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Re: Percentage of VWITX subject to AMT

Post by SlowMovingInvestor » Fri Jan 12, 2018 10:18 am

Also, AMT should be less of an issue with the 2018 rise in AMT thresholds.

phisher4
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Re: Percentage of VWITX subject to AMT

Post by phisher4 » Fri Jan 12, 2018 10:20 am

rkhusky wrote:
Fri Jan 12, 2018 9:58 am
VWITX hasn't had PAB's for as long as I've owned it. The High Yield Tax Exempt had some.
I agree that this is the party line; and yet, the prospectus indicates that "Up to 20% of each Fund’s assets may be invested in securities that are subject to the alternative minimum tax."

Is Vanguard providing conflicting information?

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indexfundfan
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Re: Percentage of VWITX subject to AMT

Post by indexfundfan » Fri Jan 12, 2018 12:08 pm

This article

https://advisors.vanguard.com/iwe/pdf/FAFIGBRO.pdf

from Vanguard says

"With the exception of the muni money market portfolios and Vanguard High-Yield Tax-Exempt Fund, there is no exposure to alternative minimum (AMT) private activity bonds."

This is not the prospectus though.
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indexfundfan
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Re: Percentage of VWITX subject to AMT

Post by indexfundfan » Fri Jan 12, 2018 12:29 pm

An alternative: Vanguard's VTEB tracks the S&P National AMT-free Municipal Bond index.
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cas
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Re: Percentage of VWITX subject to AMT

Post by cas » Fri Jan 12, 2018 12:32 pm

If you go to the Fund Snapshot page for a Vanguard tax-exempt fund, then click on the "Portfolio & Management" tab, one of the items listed is the % of the fund's income that is subject to the AMT (as of whatever date is listed at the top of that table).

For example, the info on VWIUX would be found here: https://personal.vanguard.com/us/funds/ ... true#tab=2 ( (You have to scroll down some to see the "Alternative Minimum Tax" line.) (And ... as of 11/30/2017 the % of income of VWIUX subject to AMT was 0.0% )

Of course, that gives a current snapshot only.

rkhusky
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Re: Percentage of VWITX subject to AMT

Post by rkhusky » Fri Jan 12, 2018 12:38 pm

phisher4 wrote:
Fri Jan 12, 2018 10:20 am
rkhusky wrote:
Fri Jan 12, 2018 9:58 am
VWITX hasn't had PAB's for as long as I've owned it. The High Yield Tax Exempt had some.
I agree that this is the party line; and yet, the prospectus indicates that "Up to 20% of each Fund’s assets may be invested in securities that are subject to the alternative minimum tax."

Is Vanguard providing conflicting information?
The operable word is "may". Vanguard has the option to, but has chosen not to hold PAB's in recent years. You will notice that financial institutions often put language like this into their terms to go give themselves flexibility.

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