For mutual funds, yes. I submitted the form to change to "tax lot optimized" for our taxable account (this is not something that applies to Roth or tIRA). It's a minor annoyance that I had to download and then upload a paper form, but it's a one time thing. My understanding is that you can also contact them to specify shares to sell after submitting the sell order, if you want to choose something other than your default. I'm not sure of the timing for making such a request or if it can be done via chat or email, or only by phone. If I ever need to do this, my plan would be to email my "dedicated" rep. and see if that works, if he can't do it based on an email, I'm sure that he will just call or email me back to let me know what to do.BuglesHead wrote: Mon Dec 25, 2023 7:44 pm 3. default to average cost basis for selling shares? have to submit a pdf form to switch your default to tax optimized? I'm a little lost on this one
Same here, except I am using Schwab's Treasury Money Market and have no mortgage, so everything is via credit card and I have moved most due dates to shortly after our monthly pension deposits occur, to simplify things and minimize the time that money is earning 0.45% in Schwab checking.Right now I'm at a point where I've been paying all of my bills and purchases with CC (except mortgage), simply for rewards and tracking. Then I manually move my money out of my HYSA before the payment date. That's no big deal, so I don't think the lack of auto MMF would really bother me.
I don't generally have a need to silo money like that, except sometimes timing the maturity of individual treasuries. For example, I can buy a T-bill (or T-note/bond) that matures about when I will pay property tax. That leaves less in the money market, avoiding the 0.34% ER at the cost of, perhaps, slightly more complicated taxes.First, how is everyone tracking multiple short term savings goals? My HYSA at SoFi has "Vaults" where you can have different sets of funds set aside for each goal. Is it feasible with Schwab to maybe buy into multiple MMF and keep note somewhere (maybe in my own records) what each MMF is a goal for? Is that just silly? These are just for basic things like the laptop I replace every few years for programming, for vacation, etc.
Due to the high ER on the money markets, I have also used funds like SWSBX (Schwab short term bond index) and PYLMX (NTF ultrashort term bond fund with 0.25% ER) as cash substitutes. So far, to keep taxes simpler and because our taxable account is very small, I have only done this in tax deferred, but I may be venturing into doing something like this in taxable.
That is correct.Second question, there's no real tax benefit for ETF vs mutual fund in a tax advantaged account, correct?
I don't think it's much, if you look at the historical distributions they are pretty small.I'm only going to be maxing both my "401k" & Roth for a few years at first. Once I am actually buying things in a non-tax advantaged account, is the tax difference for schwab index mutual funds vs ETFs that large?
You can calculate what your tax cost would've been from those past distributions. If/when you are actually spending the money, then the distributions don't even matter (except if they are short term cap gains). Also, if you are in the 0% LTCG/QDI bracket, then the cost is only state income tax for those type of distributions.If I go with Schwab I just see myself doing all mutual funds solely because of the lack of fractional ETFs. Probably SWTSTX, SWISX, and SWAGX. I'm just scared at how crazy capital gains ends up being since I'm so new to all of this. I see people trying to avoid it in so many threads but no relative dollar amounts, haven't been able to find any calculator that's like... If I had put x dollars into y funds during z years how much capital gains tax would I have owed.
Some Schwab index funds may have slightly lower ERs than Vanguard, so that can offset some of the tax drag and any savings on the ER are real, permanent savings (while the taxes may only be deferred, if you eventually sell). I am stubbornly clinging to mutual funds and, while I have not yet done so, I won't hesitate to buy Schwab's in taxable.
Some of us have gotten a waiver for Vanguard mutual funds, so if you can get that by the time you are doing taxable that would be another option. I have use that to buy Vanguard tax managed small cap and tax managed capital appreciation. But I think I will buy SWPPX over VPAIX for the lower ER, if I decide to buy an S&P500 index fund.
This is not for IRA or Roth, it would serve no purpose in those accounts, you only need to choose a specific ID option for taxable. Anything you withdraw from a tIRA is taxable, there's no cost basis. Withdrawals from Roth are not taxable provided you are over 59.5 or are withdrawing only contributions.Third question, if I'm going to go with Schwab for my Roth, checking, tIRA, etc, should I just do this form to switch my accounts method for selling funds to be tax optimized instead of average cost basis before I ever even bother buying anything? Wasn't sure since I believe I saw in another thread that it only applies to future purchases and is not retroactive.