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•Required Minimum Distributions

•Capital Gains

•Social Security Benefits

•Medicare Premiums

•Potential Roth Conversions or large withdrawals from IRAs

•3.8% Net Investment Income Tax

•PEP (Personal Exemption Phaseout)

•Pease (Itemized Deduction Phaseout)

•AMT (Alternative Minimum Tax)



•Year You Reach Age 70½

•Divide Prior Year’s ending account balance by Remaining Life Expectancy

$500,000 balance

$500,000 / 27.4 = $18,248


•Mutual funds pass through (Phantom Gains)

•Rebalancing Triggers​

•Long term gains can create ordinary income tax!

When you think of Capital Gains if you are like many people, you think 15% tax, only when I sell something that appreciated.  Not really something to be that concerned about.  What many don’t realize is that you can recognize capital gains even without selling anything, particularly if you own mutual funds.  This is called a “phantom gain.”


The best way to illustrate is with an Example.  Say Mutual fund A bought Apple stock in 1985.  You bought the mutual fund in 2014 and held it all the way through 2015.  In the middle of 2015, the fund manager decides that Apple isn’t a god investment value anymore and sells the entire position.  Any gain that was recognized on the sale must be passed through the mutual fund to the current shareholders, even if they didn’t participate in any of the gain of the underlying stock. 


The important thing to remember about Capital Gains is that if you have invested Non-Qualified money, even if you are generally a buy and hold type investor, it is likely you will recognize at least some capital gains in some years.  More importantly, when you experience a Capital Gain on your return, it can have a greater impact than just the tax on the gain because it increases your adjusted gross income and may cause other deductions, exemptions, or exclusions to be phased out. 

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