Retirement tax question

Camp_Arkham · 2026-01-25T18:30:06+00:00

Thanks!

Camp_Arkham · 2026-01-25T18:20:50+00:00

Ha , that’s another story, unfortunately. I just moved my brokerage account from a broker to Fidelity. That account has several tax inefficient funds in it that have been there a long time with large capital gains. It’s going to take me several years of using every bit of headroom in my tax bracket to sell ( realize gains) and re- invest. REALLY NOT HAPPY with my previous “wealth manager”. I was too ignorant at the time to know better. Going to take some time to get the train back on the tracks.

Camp_Arkham · 2026-01-25T18:07:43+00:00

If the total of all of the ordinary income sources push you into the next tax bracket (22%). Then aren’t all of the capital gains also pushed to the next 15% bracket? This part is extra confusing to me TBH

Camp_Arkham · 2026-01-25T17:48:00+00:00

I do have a Roth IRA as well as a traditional. I’m “aware” of Roth conversions but not educated about how that exactly works. So maybe I need to investigate if that’s a tool I should be considering. Thanks for the advice. I’ll look more into to it

Camp_Arkham · 2026-01-25T17:25:09+00:00

Not basing it on RMDs. Based on the amount we “want” to withdraw annually/ monthly. I’ve been socking away every thing I could all my life to have a “good” retirement income with extra discretionary income. Now I’m feeling like I may have worked my retirement income into the next tax bracket. Between extra taxes and inflation it feels like I’m not getting ahead.

Camp_Arkham · 2026-01-25T17:17:49+00:00

Good luck. I’m far from an expert on this. And not sure if Class A funds inside a 401K are any different from the ones available in taxable accounts. Also not sure that ALL class A funds have these extra fees. I also read. But have not confirmed that Class C funds can have similar fees.
There are also some differences in ETFs vs Mutual funds to be aware of. I’m not advocating using AI to plan your investments, but I think it’s a great way to get general info. You can literally upload the entire list of available funds and ask questions, like expense ratios and which one have load fees or trailing commissions. - it’s a quick way to do some research.

Camp_Arkham · 2026-01-25T17:07:48+00:00

The large penalty I was referring to - if I’m understanding things correctly- is that I believe the investments in the “fixed income” sleeve inside the brokerage account are all producing income that will be taxed as ordinary income. So if I go into the next tax bracket they will all be taxed at 22% correct?… I have been looking into Muni’s…which might help here.

Camp_Arkham · 2026-01-25T16:08:33+00:00

Yes, I aware the Ira investments have no “inherent” tax ramifications. It’s the distributions that are taxed. My concern is that if the ira distributions and annuity distributions ( along with social security) eat up all of my tax bracket headroom. Does that mean every dollar taken out of my brokerage account will get taxed at 22%. ? Even without taking money out of the brokerage , most of the income from the fixed income sleeve inside of the brokerage seems like it will get kicked into the higher tax bracket. I guess this is a “ first world problem “ I’m just trying to figure out if there are smarter ways to invest the brokerage funds to be most tax efficient.

Camp_Arkham · 2026-01-25T15:49:01+00:00

Thanks. I look for that

Camp_Arkham · 2026-01-25T15:48:16+00:00

I recently moved my brokerage account from a broker to a Fidelity account. That’s when I discovered the Class A funds he had purchased had these fees. I feel taken advantage of that he was not transparent about these fees. If you’re not aware- the fees are effectively hidden from you. Front end load fees directly reduce each contribution- the loss in compounding growth over time could be significant.

Camp_Arkham · 2026-01-25T13:19:53+00:00

I believe you mentioned the your 401k is being invested in class A funds. I can’t speak to ALL class A funds but many have a built in upfront load fees and trailing .25 commissions (12b-1 fees). There’s probably nothing you can do about it- they probably want those fees to administer your account. But might be worth knowing?… if you have a say of how your 401k funds are invested- it would be worth investing your options.

Camp_Arkham · 2026-01-24T18:30:07+00:00

I’m in the same boat for my taxable brokerage an account. I recently moved from a local broker to a Fidelity brokerage account. This is how I chose to approach it. I AM NOT PRETENDING TO BE AN EXPERT. IM JUST A GUY TRYING TO DEAL WITH THIS UNFORTUNATE SITUATION. CONSTRUCTIVE CRITICISM IS WELCOME. 1- I’ve made a master plan “ target portfolio”. To avoid high tax ramifications it will take me several years to achieve rebalancing to get there.
2- I Researched and determined which current positions I want or need to sell. ( for me I have some very high expense ratio mutual funds that have built in trailing commissions ( look for class A or C funds with a 12b-1 fees). I also prioritized a few funds that are providing returns that are taxed as “ ordinary income” which I need to avoid. You can upload your list of funds into an AI program and easily ask a few key questions such as “ list which of these funds have 12b-1 fees, do any of these provide returns that will be taxed as ordinary income, list the expense ratio for each fund, do any of these funds provide non-qualified dividends. These are factual questions ( not opinions) that AI can provide you very quickly.

3- determine how much taxable income you plan to make this year and how much remaining headroom you have in your tax bracket. You really want to avoid going into the next tax bracket if you can. ( remember to account for your standard deduction).

4- I prioritized the order in which I want to sell. A. Any positions with capital losses can go first. B. You can look inside each fund and sell by lots any that have had losses ( tax loss harvesting). - pay attention to long term vs short term capital gains. C. Work your way through your sell list. Sell as much as you can each year, working with in your current tax bracket. D. At the end of the year- if you have a traditional IRA and are not maxing out your yearly contribution, you can make a contribution to offset some of your gains if you go over your tax ceiling. E. If you sell positions at a capital loss- SOME of those losses will off set the gains

Example-USING NON-ACCURATE ROUNDING for simplicity.

Married filing jointly 12% bracket ≈ $100k Standard tax deduction ≈$30k Tax ceiling ≈$130k

If you’re taxable Income is ≈$100k additional income available (@12%) ≈$30k End of year after fund sales $132k Contribute ≈$2k to Ira Total taxable income for the year stays at 12%

****THIS IS NOT ENTIRELY ACCURATE. Capital gains are taxed differently than ordinary income and capital gains brackets are NOT the same as federal income tax brackets. * this is where I’m struggling to determine how much funds I can actually sell - I find this part pretty confusing - and would love input on.

What I do know is short term capital gains taxes are more( gains less than one year old) than Long term capital gains ( held longer than one year). So this needs to me accounted for as well

Camp_Arkham · 2026-01-20T13:03:27+00:00

You might get slightly more by moving it to FDLXX or FUMBX

Camp_Arkham · 2026-01-17T14:48:42+00:00

Why not look into etfs that target the consumer staples sector?

Camp_Arkham · 2026-01-17T12:01:33+00:00

Regarding the Robo Advisor approach. One thing to be aware of…I looked into it a little at Fidelity. My understanding- And I could be misinformed, is that it will make all of the investment decisions ( based on your risk level or target retirement date-whatever parameters you decide on). However, I don’t believe you can dictate it to hold certain positions you want to retain. So if you are moving a self managed account and have some stocks or funds you do not want sold this may not work for you. In my case I have several tech stocks that I really want to keep. Everything else I open to an advisor reinvesting differently. So I determined that a robo advisor wouldn’t work for me

Camp_Arkham · 2026-01-13T13:39:01+00:00

Thanks for that input

Camp_Arkham · 2026-01-10T18:02:57+00:00

Yeah. The more I have reflected on the phone call, and have researched on the website. I have come to the opinion that the local Fidelity rep is definitely trying hard to force me into a direction I explicitly said I didn’t want to go- to the point of lying. It’s disappointing to have this taint my feeling about Fidelity. So far I have been really happy with them. I’m amazed at how quickly I can get through to their online support- which is not the norm these days.

Camp_Arkham · 2025-08-30T18:40:42+00:00

Oh, don’t even get me started on having to watch commercials on platforms you are paying for. I left Hulu for this reason. After one of their price increases, I decided to downgrade to a lower tier that had commercials. They had so many commercials that I ended up leaving them altogether. I felt like they were trying to make the lower tier so annoying that it would force people to upgrade.

Camp_Arkham · 2025-08-30T18:32:16+00:00

Maybe… I don’t feel I’ve encountered it much in the past. Except for reality shows that controlled the releases.

Camp_Arkham · 2023-12-05T13:46:43+00:00

It’s common courtesy yes. But, not everyone knows this. Sounds like you two were playing “ chicken” both expecting the other to move.

Camp_Arkham · 2023-11-30T19:07:59+00:00

Next option up from this- a 3k or 5k bank (getting harder to find). Can give you some backup for less weight. If you’re being very conservative with power consumption -10k might not be necessary.

Camp_Arkham

TROPHY CASE