boglefreak wrote: ↑
Thu Nov 02, 2017 8:46 pm
If you could help with a couple of questions (I have VTI in Ameritrade 401K):
1. If I have it set up as DRIP, there shouldn't be a fee as Ameritrade does not charge any fees when reinvesting VTI (or any other ETF/stock) dividends?
2. No reason to sell VTI now or any time until ready to sell as it would just be a $6.95 fee to sell all VTI shares, and could then buy e.g. SPTM for no transaction fee? And/or just hold VTI and if want transaction free ETFs, from now on pick up SPTM and sell VTI whenever I would otherwise.
Thanks for the help.
1) The DRIP program is free, and there are no fees when dividends are reinvested into your existing ETF/stock holdings.
2) The only reason to sell VTI before the January 19, 2018 cutoff date is to avoid the $6.95 fee. If you sell after that date, you will be charged the one-time $6.95 fee. There will be no cost to purchase SPTM for the foreseeable future, regardless of what you do with your other holdings. The only restriction on the "commission-free ETFs" is that you can't sell them within 30 days of purchase, otherwise you get hit with a special short-term trading penalty (approximately $13.90, or the cost of two trades).
If I was keeping my taxable account at TDAmeritrade, I would do as you suggested by picking up SPTM commission-free going forward, and only selling my existing VTI shares when I'm good and ready.
In a retirement account there is no risk of creating a taxable event by selling appreciated shares. My plan for those accounts would be to ditch the VTI shares before January 19, 2018 and buy SPTM instead in order to save the $6.95.