Transferring taxable accounts

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BAM!
Posts: 168
Joined: Thu Nov 29, 2012 5:56 pm

Transferring taxable accounts

Post by BAM! » Wed Oct 04, 2017 2:01 am

I have a family member who wants to transfer her taxable account from "High fees advisor A" to "Lower fees advisor B." She doesn't want to do low cost index funds despite my years of failed persuasion. Eh, it's ultimately her decision.

Is there a way to transfer without creating a taxable event, ie capital gains? I've heard about "like kind" transfers but don't know much about them. Could a "like kind" transfer work for mutual funds?

Also, a significant portion of the account is capital gains. So does it really matter if she pays capital gains now vs later? She'll have to pay it at some point, right? In a sense, I see it as you only really own 70-75% of your gains (assuming state 10% and federal 20% are taken away now or later).

AlohaJoe
Posts: 2412
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Transferring taxable accounts

Post by AlohaJoe » Wed Oct 04, 2017 2:28 am

BAM! wrote:
Wed Oct 04, 2017 2:01 am
I have a family member who wants to transfer her taxable account from "High fees advisor A" to "Lower fees advisor B."

Is there a way to transfer without creating a taxable event, ie capital gains? I've heard about "like kind" transfers but don't know much about them. Could a "like kind" transfer work for mutual funds?
What did Advisor B say when you asked them? Isn't this exactly what you're paying them for?

But the answer is: yes, it is possible. Advisor B fills out some forms and waits some amount of time for Advisor A to process them. Anywhere from 2-15 days, usually.
Also, a significant portion of the account is capital gains. So does it really matter if she pays capital gains now vs later?
Yes. No. Maybe. It depends on her particular circumstances. You can use things like TaxCaster or TaxAct to fill out a tax return for various scenarios and see what the result is.

BAM!
Posts: 168
Joined: Thu Nov 29, 2012 5:56 pm

Re: Transferring taxable accounts

Post by BAM! » Wed Oct 04, 2017 2:54 am

I never talked with advisor B. Yes, I agree with you. They said they couldn't do it because they wanted to reinvest it their way.

dbr
Posts: 23282
Joined: Sun Mar 04, 2007 9:50 am

Re: Transferring taxable accounts

Post by dbr » Wed Oct 04, 2017 9:05 am

BAM! wrote:
Wed Oct 04, 2017 2:54 am
I never talked with advisor B. Yes, I agree with you. They said they couldn't do it because they wanted to reinvest it their way.
Out of the frying pan into the fire, eh. And, with a tax cost on top of it. :oops:

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