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Transferring taxable account to Vanguard

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  • Transferring taxable account to Vanguard

    Thanks to WCI, I am feeling ready to take over control of my finances. I am slowly digging myself out from many years with NWM and I am getting ready to transfer my accounts to Vanguard. I understand that the Roth IRA will transfer without any taxable event. I have 105K in a taxable account at NWM--39K of this is invested in Vanguard funds already and the rest is split among SPDR S &P 500 ETF and some ishares funds. The unrealized gains are about 15K for the non-vanguard funds and 7K for the vanguard funds. On my recent statement, my short term gains for the year are 3K and my long term is a loss of 5K. I have a couple of questions:

    1) Will the vanguard funds transferred in kind in the taxable account trigger a capital gains tax on the 7K of unrealized gains for those funds or can those just be carried over since they could stay in those funds (I am trying to follow the 3 fund portfolio and the current vanguard funds are in an international developed markets ETF (25K) an international equity index emerging markets ETF(13K) and real estate index ETF1K so not sure if I would end up keeping them in the same funds but could for a little while) ?

    2) Should I only sell the funds that have long term gains or, since it is only 3K for short term gains, just go ahead and transfer everything? Our tax rate will probably be at 24% this year. I am just not sure if I am understanding all of the numbers correctly and want to make sure that I have thought everything through.

    Thanks for the help!

  • #2
    Call Vanguard and have them transfer everything "in kind"- ie don't sell anything. They should keep track of the cost basis and unrealized gains etc. So all the funds just move over to Vanguard exactly the same. Only take the gains (long term) once you actually need them (or if you happen to plan ahead for a year with no/low income and 0% capital gains).


    • #3
      Funds transferred in kind will not incur a tax bill. BUT, if you need to rebalance, you should rebalance. We’re close enough to year-end, however, that you can plan between 2020 and BOY 2021.

      Otherwise, at your tax bracket, I would go for it (if it were me). If you were a client, there w/b many more questions, a projection or 2, and planning involved. Don’t let the tax tail wag the net worth dog.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087