If you're bracing for year-end mutual fund distributions, swapping assets for exchange-traded funds could sidestep the capital gains payout for 2024 and beyond.
Some mutual funds distribute yearly capital gains to shareholders, typically in November and December.
By comparison, most ETFs don't have an annual payout, which helps reduce ongoing taxes.
Typically, investors incur capital gains when trading profitable mutual funds for ETFs in a brokerage account.
Depending on their income, certain investors can "capital gain harvest" — strategically selling profitable assets while in a lower tax bracket — to swap mutual funds for ETFs, said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
Persons:
Tommy Lucas, Moisand Fitzgerald Tamayo
Locations:
Orlando , Florida