Author Topic: Is trading Vanguard Target Date fund for VTSAX taxable?  (Read 1510 times)

Samsam

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Is trading Vanguard Target Date fund for VTSAX taxable?
« on: March 08, 2018, 01:53:21 PM »
Hello,

I have a Roth and Trad IRA with Vanguard and want to switch from the Target Date fund over to VTSAX admiral shares.  I am finding differing opinions online on whether this is a taxable event or not.  Is there any thing that will bite me later if I transfer these funds?

JohnGalt

  • Bristles
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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #1 on: March 08, 2018, 01:54:55 PM »
As long as the funds stay within their respective IRA account, there won't be any taxable event from the exchange from your target date fund into VTSAX.

Samsam

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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #2 on: March 08, 2018, 02:01:19 PM »
Thank you! the articles I saw where it was a taxable event must have meant that they were going someplace else.

seattlecyclone

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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #3 on: March 08, 2018, 09:41:28 PM »
Transactions within your IRA aren't taxable. If you were making this same exchange in a regular brokerage account instead of a retirement account you would owe capital gains tax on the target date shares you sold.

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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #4 on: March 08, 2018, 09:45:56 PM »
You're not talking about your transaction being between your Roth and your traditional IRA, are you? You are simply buying and selling within the same account, correct?

MustacheAndaHalf

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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #5 on: March 09, 2018, 07:15:32 AM »
Switching funds within your Roth IRA and Traditional IRA - provided you avoid "wash sales" with taxable accounts - would not impact taxes.

The differing opinions you read probably considered a mutual fund in a taxable account, where the sale could result in a profit or loss.

If you send money from your Traditional IRA to Roth IRA, that's taxable.  You are "converting" money from pre-tax to after-tax, and that "Roth conversion" would be taxable.

Samsam

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Re: Is trading Vanguard Target Date fund for VTSAX taxable?
« Reply #6 on: March 09, 2018, 07:20:10 AM »
Thank you all for the clarifications.  I was exchanging and staying all within Vanguard accounts:
Target fund in Trad IRA -> VTSAX in Trad IRA
Target fund in Roth IRA -> VTSAX in Roth IRA

I was getting confused about all I was finding online because they were talking about mutual funds in taxable accounts as some of you pointed out.

I'm now all in VTSAX for my Vanguard IRAs!