Mutual fund target date reached

Jeff Kantner
Jeff Kantner Member ✭✭✭
edited August 19 in Investing (Windows)

Have (had) a target-date fund that reached its target date, at which point the issuer "exchanged" it for a 'retirement fund'. $ equal, shares/prices not. Q downloaded as sell/buy. This would (I assume) reset acquisition date/price. FI online used word "merger" in both transactions. How best to record in Q? Keep the sell/buy? Only other trans type that seems close in corp. acq. stock/stock, though that's not really what happened here? There is no 'exchange' trans type.
Also not sure tax implications if held in brokerage acct.

Suggestions? TIA.

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Best Answer

  • q_lurker
    q_lurker Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓

    I am assuming from your last statement that this involves a brokerage (non-retirement) account, both real world and in Quicken. I would attempt to determine on your FI's website what the current information is for the new 'retirement fund'. I would be looking at what tax lots are shown and what basis is shown. If the basis is the same as the prior 'Targeted time' fund, the corporate acquisition or a mutual fond conversion may work fine. (A caution is that if the older fund was setup to use average cost, problems may arise.) If it is now all one lot with a new basis and a new (short-term) holding period, the Sell/Buy would be appropriate. I would tend to expect the Sell/Buy is correct since I suspect the new 'retirement fund' would not be considered fundamentally equivalent to the older 'targeted' fund.

    Hope this helps

Answers

  • [Deleted User]
    [Deleted User]

    @Jeff Kantner I would just keep the buy and sell if that is what happened. I would check how your FI showed the transactions in transaction history to verify that it is a buy and sell. The other way this fund replacement could be done is a delivery and receipt of shares. Also check for any special notes that you might want to note also in Quicken.

    As for tax implications, if the fund is held in a non-taxable account then there are is no tax implication.

    In a taxable account, if it was a buy and sell, it is a taxable event and you would need to report capital gains. If you find that it was a delivery and receipt of shares, it most likely won't have any tax implications.

  • q_lurker
    q_lurker Quicken Windows Subscription SuperUser ✭✭✭✭✭
    Answer ✓

    I am assuming from your last statement that this involves a brokerage (non-retirement) account, both real world and in Quicken. I would attempt to determine on your FI's website what the current information is for the new 'retirement fund'. I would be looking at what tax lots are shown and what basis is shown. If the basis is the same as the prior 'Targeted time' fund, the corporate acquisition or a mutual fond conversion may work fine. (A caution is that if the older fund was setup to use average cost, problems may arise.) If it is now all one lot with a new basis and a new (short-term) holding period, the Sell/Buy would be appropriate. I would tend to expect the Sell/Buy is correct since I suspect the new 'retirement fund' would not be considered fundamentally equivalent to the older 'targeted' fund.

    Hope this helps

  • Jeff Kantner
    Jeff Kantner Member ✭✭✭

    Thanks. Figured lot numbers would be a clue. Q shows several lot #'s (from div reinvests), prob. because I haven't accepted the sell/buy transactions yet. Haven't yet been able to locate the lot #'s on the acct website, but that's an FI question, not a Q question (now pursuing.) As it happens, have some shares of this in both an IRA and a brokerage acct - so the answers may be different.

    (Apologies for late reply - thought I would get an email notification of it - didn't.)

  • Jeff Kantner
    Jeff Kantner Member ✭✭✭

    FYI, after finally figuring where to look in FI website for lot info, discovered new holding retained all lot info/date/basis from old holding. So I went with Corp Acq stock/stock - generated one Removal and a bunch of Add Shares (1/lot), with basis/date retained. Btw, FI did this for both brokerage and IRA accts, so did I.
    Thx for the tips.😊

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