I just opened a taxable account with Vanguard last year (VTSAX) and I had a few questions since this is my first experience with a taxable account.
1. If I withdraw any of it within a year of its purchase, it is taxed at a higher rate than if I withdraw it after a year, correct?
2. I can withdraw my initial contribution tax free (because it was already taxed before going in), but I have to pay tax on any gains, correct?
If 1 and 2 are right:
3. I'm assuming the tax amount on any funds withdrawn are based on the increase value of each share, correct? For instance, if I put $20K in all at one time and after a year it is worth $22K and I want to withdraw $5K, I am assuming that the withdrawal is only taxed on the value per share increased from the time I initially bought the shares, is this correct? So it is essentially a pro rata taxing?
If 3 is right:
4. How are taxes determined if there are numerous buys at different share prices? For example, I buy $10K when shares are $50/share, another $10K when they are $55/share, and another $10K when they are $60/share. A year passes and I want to withdraw $15K. Is the $15K taxed as if $10K of it was bought at $50 and $5K of it was bought at $55 (ignoring gains at this point, focused on timing of contributions) or is this taxed otherwise?
And finally:
5. If I buy $15K of shares 13 months ago and $15K of shares 1 month ago and wish to withdraw $5K, is that taxed at the long-term rate? And if I withdraw $20K, is $15K of the withdrawal taxed at the long-term rate with $5K of it taxed at a short term rate or would it be $10K and $10K?
(Would this question make more sense if it was presented in number of shares purchased rather than $ amount?)