Investing Insights: The Latest on ETF Tax Changes and Model Portfolios

In this week’s podcast, Ben Johnson unpacks what tax changes could be in store for ETF investors, Jason Kephart fills us in on why asset managers are teaming up, Russ Kinnel discusses well-regarded funds having a tough year, and Tim Steffen has some year-end tax planning tips for us.

[bob]

Another option is to set up a deferred annuity, or longevity annuity (QLAC), in your taxable IRA. That way RMDs are not taken on that annuity until the deferred annuity begins a payout. Plus, if you live longer, that annuity will help at a time when medical expenses may become an larger expense.

[johns]

Ben Johnson's claim that the tax benefits of ETFs are "very democratic" and they benefit people "irrespective" of their wealth and "at all income levels" is disingenuous. Few people choose to invest significantly in ETFs held in taxable accounts unless they are already maxxing out their Roth 401ks, Roth IRAs, and HSAs. That means you need to be saving almost 30k per year as a single person (more if 55 or older) in tax sheltered accounts before ETFs in taxable accounts become attractive. Almost no one saves that much unless they are making at least 100k a year.

Ben otherwise makes a good case for changing how capital gains on investments work and I agree with him, but he doesn't have to pretend that those of us with significant ETF holdings in taxable accounts are Just Plain Folks. We're very well off, he knows it, and so does Susan D, who should have pushed back on these claims rather than throwing him softballs.