Newbie question

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6d1v7x3
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Joined: Tue Oct 08, 2019 4:28 pm

Newbie question

Post by 6d1v7x3 » Wed Oct 09, 2019 2:26 am

Hi there I was wondering if any of you guys know if I sign up for the Vanguard Target Retirement plan can I take money out of it at any time without paying taxes? TIA

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Brianmcg321
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Re: Newbie question

Post by Brianmcg321 » Wed Oct 09, 2019 6:34 am

No.

A Vanguard Target Ritirement is a fund that you would buy inside of an IRA. You could have it in a taxable account, but that's not a good choice for that type of account.

Your should read all the Bogleheads Wikis at the top of the page to learn more.
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typical.investor
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Re: Newbie question

Post by typical.investor » Wed Oct 09, 2019 6:36 am

6d1v7x3 wrote:
Wed Oct 09, 2019 2:26 am
Hi there I was wondering if any of you guys know if I sign up for the Vanguard Target Retirement plan can I take money out of it at any time without paying taxes? TIA
Are you of retirement age?

22twain
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Re: Newbie question

Post by 22twain » Wed Oct 09, 2019 6:41 am

What kind of account is it, and how old are you?

Whether it's a target retirement fund or some other type of fund (stock fund, bond fund, whatever) doesn't matter. What matters is the type of account the fund is held in.

If it's an ordinary personal investment account (what we call on this forum a "taxable account"): when you take money out, you pay tax on the capital gains (what you got from selling the shares, minus what you paid for them). You also pay tax on any dividends and capital-gains distributions, even if you automatically reinvest them back into the fund.

Traditional IRA: when you take anything out before age 59.5, you have to pay tax and penalty.

Roth IRA: If you meet certain conditions, you can withdraw your contributions (but not the gains) without tax before age 59.5. Google for "Roth IRA withdrawal rules". I'm not going to try write them all out here.
Last edited by 22twain on Wed Oct 09, 2019 6:47 am, edited 2 times in total.
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livesoft
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Re: Newbie question

Post by livesoft » Wed Oct 09, 2019 6:41 am

So the answer to the OP's question seems to be: "It depends."
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rkhusky
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Re: Newbie question

Post by rkhusky » Wed Oct 09, 2019 6:47 am

Roth IRA contributions.
Taxable account shares that have no capital gains.
Taxable account shares with long term capital gains, if the shares are in the 0% long term capital gain bracket.
Taxable account qualified dividends and long term capital gain distributions, if the shares are in the 0% long term capital gain bracket.

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tennisplyr
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Re: Newbie question

Post by tennisplyr » Wed Oct 09, 2019 12:28 pm

livesoft wrote:
Wed Oct 09, 2019 6:41 am
So the answer to the OP's question seems to be: "It depends."
+1
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dbr
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Re: Newbie question

Post by dbr » Wed Oct 09, 2019 1:36 pm

6d1v7x3 wrote:
Wed Oct 09, 2019 2:26 am
Hi there I was wondering if any of you guys know if I sign up for the Vanguard Target Retirement plan can I take money out of it at any time without paying taxes? TIA
Note this is not a retirement plan. Vanguard Target Retirement Funds are mutual funds. That is they are investments which you can buy with your money. After that the investment may distribute dividends and/or capital gains distributions, and you can sell part or all of what you own at whatever price you can get for it on the market at the time. Others have explained about taxes for those things.

You can open various kinds of accounts to hold investments such as a TR fund. Accounts can include individual taxable accounts, IRAs, trust accounts, and various other things. You might own funds in a 401k or 457 at your employer. What kind of account things are held in affects how things are taxed Some of these things may be referred to as a retirement plan. It can be that an employer or organization actually does have a retirement plan for its employees, often called a pension plan, that involves employees contributing money and investing in something. There are different kinds of pension plans and some of them do not involve employees contributing money and buying things and others do. A 401k would often be referred to as a retirement plan.

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