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re: Vanguard IRA Question

Posted on 7/15/15 at 2:26 am to
Posted by Volvagia
Fort Worth
Member since Mar 2006
51916 posts
Posted on 7/15/15 at 2:26 am to
Please elaborate on how the ETF has better tax consequences than the related mutual fund.

And I think you are 100% wrong on Vanguard's policies regarding frequent trading ETFs.

They will lock it down some for mutual funds (although there are workarounds), there is no restrictions for any ETF.
This post was edited on 7/15/15 at 2:29 am
Posted by bayoubengals88
LA
Member since Sep 2007
19009 posts
Posted on 7/15/15 at 7:56 am to

quote:

Please elaborate on how the ETF has better tax consequences than the related mutual fund.


Are there any tax advantages to owning a Vanguard ETF®?
Because Vanguard ETFs are shares of conventional Vanguard index funds, they can take full advantage of the tax-management strategies available to both conventional funds and ETFs.
Conventional index funds can offset taxable gains by selling securities that have declined in value at a loss. In addition, they tend to trade less frequently than actively managed funds, which means less taxable income gets passed on to shareholders. Vanguard ETFs can also use in-kind redemptions to remove stocks that have greatly increased in value (which trigger large capital gains) from their holdings.
Posted by jturn17
Member since Jan 2011
4978 posts
Posted on 7/15/15 at 11:11 am to
quote:

Please elaborate on how the ETF has better tax consequences than the related mutual fund.

And I think you are 100% wrong on Vanguard's policies regarding frequent trading ETFs.

They will lock it down some for mutual funds (although there are workarounds), there is no restrictions for any ETF
"If you buy and sell the same Vanguard ETF in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through your Vanguard Brokerage Account for 60 days."

It was in the link I posted. So you are 100% wrong.

Someone else already covered taxes on ETFs vs. Mutual Funds. Google also has plenty of articles that cover it.
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