How to withdraw $250K with the least impact?

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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

KlangFool wrote: Mon Jul 19, 2021 9:46 pm
Alto Astral wrote: Sat Jul 17, 2021 9:23 pm
I picked the lots with the est. gain/loss per share from $27.13 to $46.89. They add upto $103K and have Total estimated gain/loss of $32.6K. So would I pay Long term capital gains tax on the $32.6K? I should be at a 15% rate this year so would that be ~$4.9K in tax?
Correct! But, is this ETF or mutual fund? Those are priced as per today's closing price. So, it could be a bit more or less depending the price when you sell.
Its a mutual fund. All in Vanguard Total Stock Market Index Admiral Fund. I just turned off dividend reinvestment in this. My last dividend was in June. Do I wait 30 days to avoid a wash sale or is that only for the next time I buy this?
Last edited by Alto Astral on Mon Jul 19, 2021 10:00 pm, edited 2 times in total.
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cchrissyy
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Re: How to withdraw $250K with the least impact?

Post by cchrissyy »

Do I wait 30 days to avoid a wash sale or is that only for the next time I buy this?
those rules are about when you can deduct a loss. it has nothing to do with what you're doing this time. you can feel free to buy these same things again as soon as you have the money to do so.
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cchrissyy
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Re: How to withdraw $250K with the least impact?

Post by cchrissyy »

you have correctly identified that the shares to sell with the higher cost basis have the lower amount of gains in them and so you can sell them to raise the cash you need and the result will have the lowest tax due. since it's a mutual fund, if you sell tomorrow your exact price and gains recorded will depend on whatever tomorrow's market closing prices are.

i think some people would do that right now since they know they expect to spend the money, while other people would say to themselves, "ok i have a plan" and leave the investments alone until the bill actually arrives. i think in your case your investments and income are high enough that you could safely go either way but this may be more a question of personality type.
pasadena
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Re: How to withdraw $250K with the least impact?

Post by pasadena »

Alto Astral wrote: Mon Jul 19, 2021 9:43 pm Okay, I have the Spec ID and able to pick lots to sell. The oldest lot I have in LongTerm is May 2017 and latest is Dec 2019. Their respective Est. gain/loss per share are $47.72 and $27.13 respectively. Which is the highest cost basis of these? That would depend on the size of each lot. At Vanguard you should see the cost basis in the same table.
Pick the ones with the minimal gain per share to sell? Pick the ones with the lowest long term gain. Leave the ones with short term gains alone as much as possible (those are taxed at your marginal tax rate)

  • I picked the lots with the est. gain/loss per share from $27.13 to $36.89. They add upto $103K and have Total estimated gain/loss of $32.6K. So would I pay Long term capital gains tax on the $32.6K? I should be at a 15% rate this year so would that be ~$4.9K in tax?

    If they're all long term, yes.
  • I tied out the same thing as above with the lots having the highest gain per share and the total gains turned out to be $43K for a similar amount. So I am guessing don't do this and do the above
Answers above in Red.

Just please make sure all the lots you sell are LONG TERM.

Do you have any with short or long term loss?
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

pasadena wrote: Mon Jul 19, 2021 10:17 pm
Alto Astral wrote: Mon Jul 19, 2021 9:43 pm Okay, I have the Spec ID and able to pick lots to sell. The oldest lot I have in LongTerm is May 2017 and latest is Dec 2019. Their respective Est. gain/loss per share are $47.72 and $27.13 respectively. Which is the highest cost basis of these? That would depend on the size of each lot. At Vanguard you should see the cost basis in the same table.
Pick the ones with the minimal gain per share to sell? Pick the ones with the lowest long term gain. Leave the ones with short term gains alone as much as possible (those are taxed at your marginal tax rate)

  • I picked the lots with the est. gain/loss per share from $27.13 to $36.89. They add upto $103K and have Total estimated gain/loss of $32.6K. So would I pay Long term capital gains tax on the $32.6K? I should be at a 15% rate this year so would that be ~$4.9K in tax?

    If they're all long term, yes.
  • I tied out the same thing as above with the lots having the highest gain per share and the total gains turned out to be $43K for a similar amount. So I am guessing don't do this and do the above
Answers above in Red.
These are the columns Vanguard shows me when I try to sell:
Number of shares to trade Shares owned
Date acquired
Total cost
Est. available proceeds
Estimated gain/loss
Est. gain/loss per share
Term
pasadena wrote: Mon Jul 19, 2021 10:17 pm Just please make sure all the lots you sell are LONG TERM.
Yes, they are all from the "Long" under the "Term" column
pasadena wrote: Mon Jul 19, 2021 10:17 pm Do you have any with short or long term loss?
Her account has a $2.6K in short term with loss and His account has $0.7K in loss. Nothing with a loss in long term. So a total of $3.3K in short term loss
pasadena
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Re: How to withdraw $250K with the least impact?

Post by pasadena »

Alto Astral wrote: Mon Jul 19, 2021 10:29 pm
pasadena wrote: Mon Jul 19, 2021 10:17 pm
Alto Astral wrote: Mon Jul 19, 2021 9:43 pm Okay, I have the Spec ID and able to pick lots to sell. The oldest lot I have in LongTerm is May 2017 and latest is Dec 2019. Their respective Est. gain/loss per share are $47.72 and $27.13 respectively. Which is the highest cost basis of these? That would depend on the size of each lot. At Vanguard you should see the cost basis in the same table.
Pick the ones with the minimal gain per share to sell? Pick the ones with the lowest long term gain. Leave the ones with short term gains alone as much as possible (those are taxed at your marginal tax rate)

  • I picked the lots with the est. gain/loss per share from $27.13 to $36.89. They add upto $103K and have Total estimated gain/loss of $32.6K. So would I pay Long term capital gains tax on the $32.6K? I should be at a 15% rate this year so would that be ~$4.9K in tax?

    If they're all long term, yes.
  • I tied out the same thing as above with the lots having the highest gain per share and the total gains turned out to be $43K for a similar amount. So I am guessing don't do this and do the above
Answers above in Red.
These are the columns Vanguard shows me when I try to sell:
Number of shares to trade Shares owned
Date acquired
Total cost
Est. available proceeds
Estimated gain/loss
Est. gain/loss per share
Term
pasadena wrote: Mon Jul 19, 2021 10:17 pm Just please make sure all the lots you sell are LONG TERM.
Yes, they are all from the "Long" under the "Term" column
pasadena wrote: Mon Jul 19, 2021 10:17 pm Do you have any with short or long term loss?
Her account has a $2.6K in short term with loss and His account has $0.7K in loss. Nothing with a loss in long term. So a total of $3.3K in short term loss
Did you buy any of these funds in the last 30 days?
- If not, then sell the lots with losses (contrary to gains, short term losses are better than long term ones!).
- If yes then make sure to ALSO sell the lots you bought less than 30 days ago, to avoid a wash sale.

That'd be your very first tax loss harvesting :)
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

pasadena wrote: Mon Jul 19, 2021 10:33 pm
Alto Astral wrote: Mon Jul 19, 2021 10:29 pm
pasadena wrote: Mon Jul 19, 2021 10:17 pm Do you have any with short or long term loss?
Her account has a $2.6K in short term with loss and His account has $0.7K in loss. Nothing with a loss in long term. So a total of $3.3K in short term loss
Did you buy any of these funds in the last 30 days?
- If not, then sell the lots with losses (contrary to gains, short term losses are better than long term ones!).
- If yes then make sure to ALSO sell the lots you bought less than 30 days ago, to avoid a wash sale.

That'd be your very first tax loss harvesting :)
Her purchased on 06/15/2021 for $2K is at a short term loss of –$14
Her purchased on 06/23/2021 for $0.6K is at a short term loss of –$2 (I believe this was the dividend reinvesting)
His purchased on 06/23/2021 for $0.7K is at a short term loss of –$3 (I believe this was the dividend reinvesting)
pasadena
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Re: How to withdraw $250K with the least impact?

Post by pasadena »

Alto Astral wrote: Mon Jul 19, 2021 10:40 pm
pasadena wrote: Mon Jul 19, 2021 10:33 pm
Alto Astral wrote: Mon Jul 19, 2021 10:29 pm
pasadena wrote: Mon Jul 19, 2021 10:17 pm Do you have any with short or long term loss?
Her account has a $2.6K in short term with loss and His account has $0.7K in loss. Nothing with a loss in long term. So a total of $3.3K in short term loss
Did you buy any of these funds in the last 30 days?
- If not, then sell the lots with losses (contrary to gains, short term losses are better than long term ones!).
- If yes then make sure to ALSO sell the lots you bought less than 30 days ago, to avoid a wash sale.

That'd be your very first tax loss harvesting :)
Her purchased on 06/15/2021 for $2K is at a short term loss of –$14
Her purchased on 06/23/2021 for $0.6K is at a short term loss of –$2 (I believe this was the dividend reinvesting)
His purchased on 06/23/2021 for $0.7K is at a short term loss of –$3 (I believe this was the dividend reinvesting)
No other lots purchased less than 30 days ago? Then you should be good. If you sell the other ones that have losses, be sure to also sell the ones bought on 06/23. And be sure not to buy more within the next 30 days.
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

pasadena wrote: Sat Jul 17, 2021 10:54 pm I'd go with a no-cost cash-out refi before a 401(k) loan. Especially when their current mortgage is at 3.625%. Or a HELOC, depending on the rate and how fast they can pay it back.
presto987 wrote: Sat Jul 17, 2021 11:18 pm You should be able to do quite well if you refinance into another 30-year, but as the previous poster noted, rates on 5y ARMs are very attractive, and there's no reason not to take one of those if you're not planning to stay in the house for a while.

...Better Mortgage is also worth a look, especially if you have an Amex card as you can earn an extra $2k with their current Amex offer.
Current loan: $240K @ 3.625% for 30 y. Monthly payment ~$1.1K (no escrow)
Current balance: ~$200K
Better offer 2.5% for 30 y with $4.4K $1.7K closing costs rolled into the loan. Monthly payment ~$800 (no escrow)
$2K Amex credit
Last edited by Alto Astral on Tue Jul 20, 2021 7:25 pm, edited 1 time in total.
presto987
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Re: How to withdraw $250K with the least impact?

Post by presto987 »

Great offer! My only recommendation is to move up your interest rate to collect more lender credit. If you only stay in the home for 2 years, you will be better off that way. Of course there is a chance you stay longer, but if that happens, 2.625% or 2.75% or 2.875% isn't going to kill you. In my view, the best bet is to take the couple thousand extra dollars up front.

EDIT: I just saw in the other thread that you had $4400 of closing costs rolled into the loan. I retract my "great offer" comment. You should definitely move up the rate to get more lender credit. Otherwise, if you sell the home after 2 years, you're basically wiping out your interest savings in the form of closing costs, although the Amex offer does mitigate that.
Last edited by presto987 on Tue Jul 20, 2021 6:57 pm, edited 1 time in total.
Compound
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Re: How to withdraw $250K with the least impact?

Post by Compound »

$250,000!!!

I just want to ensure that you are looking at this issue from all avenues — not just how to pay, as has been the focus of this thread, but if the amount you’re slated to pay could be reduced. Please confirm that you have cross shopped this estimate with multiple hospitals and this was the best that came up?
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

presto987 wrote: Tue Jul 20, 2021 6:50 pm Great offer! My only recommendation is to move up your interest rate to collect more lender credit. If you only stay in the home for 2 years, you will be better off that way. Of course there is a chance you stay longer, but if that happens, 2.625% or 2.75% or 2.875% isn't going to kill you. In my view, the best bet is to take the couple thousand extra dollars up front.

EDIT: I just saw in the other thread that you had $4400 of closing costs rolled into the loan. I retract my "great offer" comment. You should definitely move up the rate to get more lender credit. Otherwise, if you sell the home after 2 years, you're basically wiping out your interest savings in the form of closing costs, although the Amex offer does mitigate that.
The closing cost is reduced to $1.7K. If that looks good, I can lock tonight.

Some other rates w/ credits:
2.625% / 2.651% Credits - $1,583
2.750% / 2.777% Credits - $3,240
2.875% / 2.902% Credits - $4,523
3.125% / 3.154% Credits - $4,958 (Cost increased from $1.7K to $2.9K)
Last edited by Alto Astral on Tue Jul 20, 2021 8:05 pm, edited 1 time in total.
presto987
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Re: How to withdraw $250K with the least impact?

Post by presto987 »

Looks good - I would take the 2.875%.
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cchrissyy
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Re: How to withdraw $250K with the least impact?

Post by cchrissyy »

presto987 wrote: Tue Jul 20, 2021 7:54 pm Looks good - I would take the 2.875%.
same
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

Compound wrote: Tue Jul 20, 2021 6:56 pm $250,000!!!

I just want to ensure that you are looking at this issue from all avenues — not just how to pay, as has been the focus of this thread, but if the amount you’re slated to pay could be reduced. Please confirm that you have cross shopped this estimate with multiple hospitals and this was the best that came up?
Yep. Actually its relatively less and other hospitals charge almost twice or more of that amount.
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

cchrissyy wrote: Tue Jul 20, 2021 8:30 pm
presto987 wrote: Tue Jul 20, 2021 7:54 pm Looks good - I would take the 2.875%.
same
My wife is cautioning me that the whole "move in 2 years" is not a done deal. We both want it and there's no logistical issue for me. However, she needs to find a new gig or request for the current role to be remote. While it's not hard in tech, she just wants me to pick the lowest rate. And of course there's the "who knows what will happen in 2 years" boogeyman.
presto987
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Re: How to withdraw $250K with the least impact?

Post by presto987 »

I totally get it. The other thing to consider is that if you refi again (suppose you decide you want to do a cash out later), then any closing costs you pay this time are sunk, and any lender credit you get this time stay in your pocket while your rate is going to change anyway.

I haven’t calculated the exact number, but taking a lowe rate is probably only worthwhile if you keep this mortgage for at least 4 years - meaning you stay in the house that long and don’t refi the mortgage.

But I get it. It feels good to have a lower rate, and if you stay in the home forever and don’t wind up doing a cash out or other refi, then the lower rate will be best in the long run.
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Alto Astral
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Re: How to withdraw $250K with the least impact?

Post by Alto Astral »

presto987 wrote: Tue Jul 20, 2021 9:40 pm I totally get it. The other thing to consider is that if you refi again (suppose you decide you want to do a cash out later), then any closing costs you pay this time are sunk, and any lender credit you get this time stay in your pocket while your rate is going to change anyway.
pasadena wrote: Sat Jul 17, 2021 10:54 pm I'd go with a no-cost cash-out refi before a 401(k) loan. Especially when their current mortgage is at 3.625%. Or a HELOC, depending on the rate and how fast they can pay it back.
grkmec wrote: Sun Jul 18, 2021 8:09 pm Go to https://www.thirdfederal.com/ and get a HELOC. This is zero closing cost and rate is 2.24% variable. Fed isn't raising for about 18 months, and you can pay this off at your leisure. Given your net worth, floating a HELOC a 2-3 years is no big deal.
A HELOC seems to have a better rate than cash out refi. ThirdFederal is offering a 2.24% for amounts up to $200K. The money freed up with lower payments in regular refi could go towards the HELOC repayment payment. If I need to repay $100K HELOC in 3 years, the monthly payment would be $3K. This is assuming the rate does not change too much during that time. They have a $65 annual fee and don't seem to have prepayment penalties
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