Author Topic: (Another) Moving out of Edward Jones (Taxable Acct)  (Read 1175 times)

drumstache

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(Another) Moving out of Edward Jones (Taxable Acct)
« on: June 30, 2021, 09:29:02 AM »
Have a traditional IRA and a Taxable acct. with EJ.  I'm going to move to Vanguard

The IRA should be easy, will do an In-Kind transfer to VG.  Then move to VanGuard Funds.

For the taxable (inherited in 2016), should I just do an in-kind transfer and leave the funds alone, to avoid the Capitol Gains? 

Is there an easy way to calculate what the taxes would be if I exchange for VanGuard funds?  Anything else I'm overlooking, or should be aware off before I pull the plug?

Thanks!

Edit to add:  Total Unrealized gain on the Taxable acct is: $4,957
« Last Edit: June 30, 2021, 09:48:00 AM by drumstache »

Catbert

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #1 on: June 30, 2021, 10:43:07 AM »
If I liked the Edward Jones mutual funds/ETF/stocks I'd transfer in kind and leave them alone.  If I didn't want to keep them for the long haul and there was only cap gains of 5K then I'd cash them out at Edward Jones and have them send me a check.  That way I'd be sure that the tax basis that Edward Jones has been tracking gets properly reported. 

Well, I guess cashing out really depends on how much the taxable account is worth.  5K capital gains on a 7K account would be a different situation than on a 100K account.  If you decide to keep them, set it up so all cap gains and dividends generated by the account are paid out rather than reinvested.

Also be sure that an extra 5K income won't screw up anything else, e.g., ACA.

yachi

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #2 on: June 30, 2021, 10:43:53 AM »
You'll need to know if your gains are short term (bought less than 1 year ago), or long term (owned for more than 1 year).  The $4,957 should be the only portion subject to taxes.  Short term gains are taxed at your income tax bracket, long term gains are taxed lower, sometimes 0%.  Here is a table with long-term tax rates.  Just multiply the rate by your gain and you get the amount of taxes.  A benefit of selling now is EJ will report your tax basis and gains to the IRS, and they'll send you an end-of-year form with your gains to use in filing your taxes.  If you move over the funds, you'll want to write down all the information EJ has on them: when you made purchases and how much they cost, how much they cost to purchase as well.  You'll need that information for your taxes when you eventually sell in your vanguard account.
If you find yourself in the 0% long term capital gains bracket and all of your gains are long-term, I would sell everything, transfer the money to your checking account, put the money into your new brokerage account, and buy what you want.  That way you don't have to keep record of the tax basis.

drumstache

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #3 on: June 30, 2021, 01:05:28 PM »
5K capital gains on a 7K account would be a different situation than on a 100K account.  If you decide to keep them, set it up so all cap gains and dividends generated by the account are paid out rather than reinvested.

Its roughly 30K.

You'll need to know if your gains are short term (bought less than 1 year ago), or long term (owned for more than 1 year).  The $4,957 should be the only portion subject to taxes.  ......  If you move over the funds, you'll want to write down all the information EJ has on them: when you made purchases and how much they cost, how much they cost to purchase as well.  You'll need that information for your taxes when you eventually sell in your vanguard account.
If you find yourself in the 0% long term capital gains bracket and all of your gains are long-term, I would sell everything, transfer the money to your checking account, put the money into your new brokerage account, and buy what you want.  That way you don't have to keep record of the tax basis.

Looks like I will be in the 15% bracket.  All gains are long term (I assume, since I haven't added anything to it since I inherited).  I have a statement that shows cost basis for everything, but not the date bought.  I assume the date will be when I inherited it.  If that's the case, this document should be all I need for my records.


yachi

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #4 on: June 30, 2021, 02:27:32 PM »
5K capital gains on a 7K account would be a different situation than on a 100K account.  If you decide to keep them, set it up so all cap gains and dividends generated by the account are paid out rather than reinvested.

Its roughly 30K.

You'll need to know if your gains are short term (bought less than 1 year ago), or long term (owned for more than 1 year).  The $4,957 should be the only portion subject to taxes.  ......  If you move over the funds, you'll want to write down all the information EJ has on them: when you made purchases and how much they cost, how much they cost to purchase as well.  You'll need that information for your taxes when you eventually sell in your vanguard account.
If you find yourself in the 0% long term capital gains bracket and all of your gains are long-term, I would sell everything, transfer the money to your checking account, put the money into your new brokerage account, and buy what you want.  That way you don't have to keep record of the tax basis.

Looks like I will be in the 15% bracket.  All gains are long term (I assume, since I haven't added anything to it since I inherited).  I have a statement that shows cost basis for everything, but not the date bought.  I assume the date will be when I inherited it.  If that's the case, this document should be all I need for my records.

Sounds like you would owe 15%*$4,957 = $743.55 in taxes.

That's really only 2.5% of your 30K.  If you're in some high expense ratio funds, you might want to switch to lower ratio Vanguard funds.  I can't see EJ funds online because they push you to financial advisors instead.

drumstache

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #5 on: June 30, 2021, 03:26:35 PM »

That's really only 2.5% of your 30K.  If you're in some high expense ratio funds, you might want to switch to lower ratio Vanguard funds.  I can't see EJ funds online because they push you to financial advisors instead.

Here's what's in the taxable acct with expense ratio:
Franklin Mutual Global Discovery Fund; Class A - 1.28
FRANKLIN RISING DIVIDENDS CL A - 0.87
INVESCO DIVERSIFIED DIVIDEND CL A - 0.84

This is what's in the IRA:
INVESCO CORP BOND CL A - 0.74
Invesco Comstock Fund; Class A - 0.83
Invesco Oppenheimer Discovery Mid Cap Growth Fund; Class A - 1.05
INVESCO EMERGING MARKETS ALL CAP CL A - 1.38
INVESCO GROWTH & INCOME CL A - 0.81
INVESCO DIVERSIFIED DIVIDEND CL A - 0.84
Invesco International Growth Fund; Class A - 1.35



Car Jack

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #6 on: July 01, 2021, 06:46:38 AM »
Personally, I'd sell it all, take the cap gains hit and escape those exorbitant expense ratios.  You do want to also be moving in kind to Vanguard.  When I made the mistake of moving to Vanguard, at least they did warn me to liquidate first, because if I moved in kind and sold at Vanguard, they'd charge me $75 per fund.

I eventually moved my Vanguard ETF to TDAmeritrade and recently, moved that to Schwab.

yachi

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #7 on: July 01, 2021, 07:11:26 AM »

That's really only 2.5% of your 30K.  If you're in some high expense ratio funds, you might want to switch to lower ratio Vanguard funds.  I can't see EJ funds online because they push you to financial advisors instead.

Here's what's in the taxable acct with expense ratio:
Franklin Mutual Global Discovery Fund; Class A - 1.28
FRANKLIN RISING DIVIDENDS CL A - 0.87
INVESCO DIVERSIFIED DIVIDEND CL A - 0.84

This is what's in the IRA:
INVESCO CORP BOND CL A - 0.74
Invesco Comstock Fund; Class A - 0.83
Invesco Oppenheimer Discovery Mid Cap Growth Fund; Class A - 1.05
INVESCO EMERGING MARKETS ALL CAP CL A - 1.38
INVESCO GROWTH & INCOME CL A - 0.81
INVESCO DIVERSIFIED DIVIDEND CL A - 0.84
Invesco International Growth Fund; Class A - 1.35

It looks like you average almost a 1% expense ratio in your taxable account.  You could probably get these down to 1/3% with Vanguard funds, and save 2/3% per year.  So in 4 years you would recoup the taxes you paid with savings in the expense ratio.

I'm not a fan of heavy dividend things in taxable accounts before retirement, so I would pass on the dividend-specific funds.  My reasoning is before retirement, you don't need to spend the dividends, but you're still paying taxes on them every year.

Gone Fishing

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #8 on: July 04, 2021, 05:58:30 AM »
Are you maxing out your retirement accounts?  If not, you could bump your contributions to lessen the tax bite.

Or, if you are very close to the 15% threshold, you could split the sale between two tax years.

drumstache

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Re: (Another) Moving out of Edward Jones (Taxable Acct)
« Reply #9 on: October 07, 2021, 10:29:19 AM »
Are you maxing out your retirement accounts?  If not, you could bump your contributions to lessen the tax bite.


Yes, maxing out the 401 & IRA.

Just an update, have moved everything out of EJ to VanGuard.

Also had 2 M.Lynch funds.  An old IRA and a rolled over 401.  Transferred the IRA to VG as well.  (Leaving the old 401 @ M.L. for the platinum benefits through Bank of America)

Been slowly selling off, and buying lower cost VG funds.  Done with all the funds in VG IRA's (There were quite a few funds to deal with after moving the M.L. over as well).

Have 2 funds left in the taxable, and 3 in the old M.L. 401.

Fee Analysis thus far.

Pre Change:
Fees per year: $3,395, 10 year. $33,950 (Not counting growth & interest)
Currently:
Fees per year: $1,704 , 10 year $17,036  (Not counting growth & interest)

When I get the other funds moved, will be: $1,094 per year,   $10,935 10 year (Not counting growth & interest)

Thanks all for the assistance on this.  Been nagging at me, it's nice to get this mess cleaned up.