Anonymous
Post 03/16/2022 23:59     Subject: Vanguard Target Date funds (in taxable accounts) --- WHAT IS GOING ON?
Anonymous wrote:Ok, so we have a substantial amount of money in Vanguard target date funds. I noticed in Dec. that there was a day when the reported value dropped something like 16%. I thought it must be a glitch and it would be fixed, as I hadn't heard anything about a market crash like that.

So, I saw that it wasn't ever corrected, but the value of my portfolio didn't change... it was just a large change in the price. Again, I didn't worry about it b/c I figured it had something to do with the distributions and that affected the list price of the mutual funds. No big deal.

But, today, when I see the tax statement from Vanguard --- I'm seeing a similar number for the total ordinary dividends (as we had reported last year), but the line for "2a Total Capital Distributions" is $161,000!

Again, that looks a little alarming, but maybe it doesn't make a big difference for my taxes --- OH NO! IT DOES. Suddenly, Turbo Tax says we owe $28,000 (!!!). We didn't do anything but HOLD these two Vanguard Target date funds for the year (and added to them).

WHAT THE HECK IS GOING ON????

This does not seem right or fair.


Humblebrag by OP…they have $950k+ in Vanguard target date funds. Nice job.

Also, you did sell high at least but that was just luck.

And OP’s misfortune is a free lesson for everyone else on target date funds. Manage your risk tolerance (and maybe even more importantly, your tax strategy) between two single funds: VTSAX & VWIUX or VBTLX.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?mod=hp_featst_pos4

https://www.bogleheads.org/forum/viewtopic.php?f=10&t=366566
Anonymous
Post 03/16/2022 00:12     Subject: Re:Vanguard Target Date funds (in taxable accounts) --- WHAT IS GOING ON?
Just want to thank OP for posting this thread (and also thanks to the PP who posted the youtube video explaining what happened). I had a similar issue with VMGRX this tax season, which also had much higher than normal distributions: https://www.morningstar.com/funds/xnas/vmgrx/performance. I felt like crying when I calculated our tax bill (but then I found this thread, which made me feel not as bad!). You live, you learn, I guess. I canceled all recurring investments and also canceled any future reinvestments of dividends and capital gains distributions. I set a quarterly alarm to check the balances of the holding account, which I'll probably put into an ETF (thinking VTI).
Anonymous
Post 03/12/2022 17:31     Subject: Vanguard Target Date funds (in taxable accounts) --- WHAT IS GOING ON?
Is this why my 1099 from vanguard still isn’t ready?!
Anonymous
Post 03/12/2022 16:13     Subject: Vanguard Target Date funds (in taxable accounts) --- WHAT IS GOING ON?
Bumping this for tax season.

I think I got hit with these capital gains by holding Vanguard VASIX. Anyone else? It’s not a target date fund, they call it a “life strategy income fund”.

https://investor.vanguard.com/mutual-funds/profile/VASIX

Suddenly had $4,000 in capital gains in 2021, when in 2020 it was $150.