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Learning, Sharing, and Teaching => Investor Alley => Topic started by: moment on August 11, 2016, 11:42:11 PM

Title: Best way to consolidate accounts
Post by: moment on August 11, 2016, 11:42:11 PM
My wife has her investments across multiple companies (USAA, Etrade, Ameriprise....) in a wide array of unwisely chosen assets. I'm taking over!
I'm going to bring it all to Vanguard and put it all in a nice low-cost fund.

What's the best approach to this?

Sell it all and transfer the money to Vanguard to be reinvested?
Transfer the assets to Vanguard in-kind and then sell to buy?
Any way to do this without selling? I'm thinking on taxes... What are the tax implications of all this?

Any idea appreciated.
Title: Re: Best way to consolidate accounts
Post by: MustacheAndaHalf on August 12, 2016, 12:21:30 AM
I think your goal is to save money while managing the tax impact.  I would prioritize using:

* expense ratio.  This is the money you hope to save by switching to Vanguard.  More expensive means you want it sold first.
* current value MINUS "cost basis": your taxable profit.  When selling you will owe taxes, but there's no way around that.  You either keep funds you don't like, or you sell them.
* how long the funds were held: if it's just under a year, it pays to wait.  Median tax rate is 25% of gain for short-term (held 365 days or less), but 15% of gain for long-term (366 days or more).

I say prioritize because maybe selling will push you into a new tax bracket, or is too much gains for whatever reason.  So aim to sell the most expensive funds first, with the lowest tax impact.