Capital Gains – What You Need to Know

moneyThe end of the year also means it is time to pay out any realized capital gains from the past year. If you have an IRA or other vehicle with preferable tax implications this is probably a non-event for you, assuming you have been properly invested. However, if you have a taxable account that includes a mutual fund, the implications could be much different.

We are expecting potentially higher capital gain distributions this year than we have previously seen. This may create an unexpected tax burden if the mutual fund is held in a taxable account and the investor is not aware of the issue and monitoring it closely.

Additionally, if an investor has health coverage through the insurance marketplace and currently qualifies for a premium credit, they need to be mindful of the fact that capital gains distributions from investments in an after tax account may impact their income and hence their eligibility for premium credits.

A multitude of factors have created these higher distributions adding to the complexity of the problem. If you are concerned about the tax implications of vehicles in your investment portfolio, we recommend talking to a trusted advisor to determine the best options for the highest gains and the smallest tax implications.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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