Your Selling Strategies (if you have one - Talking Taxable accounts)

[Scallywag]

Individual stocks are not subject to taxes on dividends/CG so long as the shares aren't sold, no?

No, they are not, unless they pay dividends (and said dividends would be taxable in a taxable account).

Plus, unless I'm missing something here, i would think that having enough retirement income through RMDs that you hit any "cliffs" would actually be a good thing - a good problem to have?

My question is regardimg pensions (defined benefit) and SS. Can you get SS if employer also offered pensions?

[Like2Plan]

Individual stocks are not subject to taxes on dividends/CG so long as the shares aren't sold, no?

Well, actually yes if it is a dividend stock (in a taxable account)--you pay taxes on the dividends in the year they are paid. And, yes it is also possible to have CGs if the company sells off assets (depending on how the deal is structured) even though you yourself did not sell any shares. But, I was thinking more of index funds.

[Like2Plan]

Plus, unless I'm missing something here, i would think that having enough retirement income through RMDs that you hit any "cliffs" would actually be a good thing - a good problem to have?

I think the object should be to not run out of money before you get to the end of your retirement. RMDs are meant for the tax man to get paid--the percentage you must remove increases each year and if most of your retirement savings is in pretax, the RMDs can quickly exceed the 4% "safe" withdrawal amount. But, you could do some things to smooth out the withdrawal rate and taxes-- such as a strategic conversion of pretax to Roth. This allows you to smooth out some of the income and avoid some of the cliffs if you did nothing. (This could be an even bigger issue if you go from MFJ to MFS at some point in retirement. )

My question is regardimg pensions (defined benefit) and SS. Can you get SS if employer also offered pensions?

If you also pay into SS, you are entitled to SS benefits.

[Singuy]

Well, actually yes if it is a dividend stock (in a taxable account)--you pay taxes on the dividends in the year they are paid. And, yes it is also possible to have CGs if the company sells off assets (depending on how the deal is structured) even though you yourself did not sell any shares. But, I was thinking more of index funds.

I would never buy Index funds in taxable accounts because they are not tax efficient. I much prefer ETFs instead. But 90% of my index type funds are in tax efficient account anyways. So I create very little taxable events from my stocks every year since they are usually not the dividend producing type.

[corn18]

I would never buy Index funds in taxable accounts because they are not tax efficient. I much prefer ETFs instead. But 90% of my index type funds are in tax efficient account anyways. So I create very little taxable events from my stocks every year since they are usually not the dividend producing type.

Index mutual funds are tax efficient. ETD's are more tax efficient, but only slightly.

[disneysteve]

Index mutual funds are tax efficient. ETD's are more tax efficient, but only slightly.

I was going to say the same thing. Index funds are tax efficient. Actively managed funds, on the other hand, are not as they have a lot more portfolio turnover. The active funds also do the "window dressing" selling at the ends of the quarters and year end. We have a couple of active funds and some years they throw off a significant amount of gains in December.

[Singuy]

Index mutual funds are tax efficient. ETD's are more tax efficient, but only slightly.

Sorry when I mean tax efficiency I mean index funds generate more tax events which cost me more at the CPA office. I don't expect too much taxable events from an index fund as they do some tax loss harvesting if anything.

[Scallywag]

I was going to say the same thing. Index funds are tax efficient. Actively managed funds, on the other hand, are not as they have a lot more portfolio turnover. The active funds also do the "window dressing" selling at the ends of the quarters and year end. We have a couple of active funds and some years they throw off a significant amount of gains in December.

What are ETDs?

I no longer purchase actively managed funds. All mine are 3 Boglehead portfolio plus VXUS, VOO & SPTM.

[disneysteve]

What are ETDs?

I assume that should say ETF for exchange traded fund.

[Scallywag]

I think the object should be to not run out of money before you get to the end of your retirement. RMDs are meant for the tax man to get paid--the percentage you must remove increases each year and if most of your retirement savings is in pretax, the RMDs can quickly exceed the 4% "safe" withdrawal amount. But, you could do some things to smooth out the withdrawal rate and taxes-- such as a strategic conversion of pretax to Roth. This allows you to smooth out some of the income and avoid some of the cliffs if you did nothing. (This could be an even bigger issue if you go from MFJ to MFS at some point in retirement. )

All our IRAs and husband's current 401K are Roth. We did have prior 401Ks that we rolled over into Roth IRAs and paid taxes on so currently, except for a single jointly held investment account, no account is pre-tax. Would this still apply? The current beneficiaries are each other, and the contingent beneficiary on everything (including bank accounts & H's life insurance policy) is our son's special needs trust. The last thing I want the future trustee(s) to worry about are taxes!

If you also pay into SS, you are entitled to SS benefits.

Do most employers offer this? Would HR know? I was led to believe it was one or the other, not both, but I am confused now because I thought I saw paycheck deductions for social security taxes on hubby's last paystub. My brain is fried these days. Maybe I mis-saw / misunderstood?

[Scallywag]

Well, actually yes if it is a dividend stock (in a taxable account)--you pay taxes on the dividends in the year they are paid. And, yes it is also possible to have CGs if the company sells off assets (depending on how the deal is structured) even though you yourself did not sell any shares. But, I was thinking more of index funds.

i didn't know about a company selling off assets resulting in a CG situation for us. Good to know.

Do companies notify all of their shareholders ay tax time or only thosw who've owned shares for less than a year?

[Like2Plan]

All our IRAs and husband's current 401K are Roth. We did have prior 401Ks that we rolled over into Roth IRAs and paid taxes on so currently, except for a single jointly held investment account, no account is pre-tax. Would this still apply? The current beneficiaries are each other, and the contingent beneficiary on everything (including bank accounts & H's life insurance policy) is our son's special needs trust. The last thing I want the future trustee(s) to worry about are taxes!

Yes--no taxes on Roth. The only other little technicality is on the Roth 401K, you will still have RMDs (but, as you know you can rollover to your Roth IRA and no more RMDs on the Roth IRA).
Funding the special needs trust--I don't know how that works as trusts can be very tricky. It might be a good idea to get that reviewed with your estate planning attorney since there was such a big change to the law last year.

Do most employers offer this? Would HR know? I was led to believe it was one or the other, not both, but I am confused now because I thought I saw paycheck deductions for social security taxes on hubby's last paystub. My brain is fried these days. Maybe I mis-saw / misunderstood?

Yes--you should be able to find the deductions for SS on your DH's pay stub.

Some people do not pay into the SS system. Usually these folks have government pensions. I believe clergy are also allowed to pay into their own system for retirement (and not pay into SS).

The federal govt revamped their pension system where employees pay into both SS and a small pension (plus 401k savings). They get both the small pension and SS at retirement. And, of course if you work for one of the few employers who still offer a pension and you pay into ss--you will get both when you qualify for retirement.

[Like2Plan]

i didn't know about a company selling off assets resulting in a CG situation for us. Good to know.

Do companies notify all of their shareholders ay tax time or only thosw who've owned shares for less than a year?

Yes--usually they send out information in advance. And, usually what they do is give you a choice--take cash or shares in a spin off company (the spin off shares would not be a taxable event until you sell them)--and give you a check for the amount that does not come out even--which would be a taxable event. The good news is now a days--companies are required to calculate the basis, etc for all your covered shares. So, you just check their math.