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Two years ago, I inherited Riversource AQEAX, an Ameriprise large cap. I've never invested in it because of a hefty front load--5.75% and a high expense ratio. My Mom had invested in it for many years and well, I couldn't seem to let it go--plus it was doing well so I let it ride. It has now lost back to the original cost ratio it was at when I inherited it. Am I correct in thinking that the tax event for selling it now will be a light one? I know one should buy low and sell high but I don't really see a future with this fund. Is this a logical time to sell it? I would like to reinvest in my Vanguard taxable portfolio and hold the course with it. Many thanks! Emmie
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Hold The Course On This Inherited Fund?
#2 Guest_Skeptical_*
Posted 02 February 2008 - 07:45 PM
Emmie,
There are so many things to say about this fund. A few thoughts and I'll post more:
This fund launched in 2003 was TINY with a few hundred million in assets and a mediocre, but not lousy performance record. In march of 2006, Ameriprise merged the RS Stock fund with $1.8 BILLION in assets and a negative 4.2% five-year return into this new one. WHY? To hide the horrible recent performance of the Stock Fund. Now the fund has over $2 Billion in assets, but the performance data is only for the last few years on a fraction of that amount under management. Hope that makes some sense. FYI: the Stock Fund had been around 61 years!
Here's an excerpt from the prospectus for RS Stock issued four months before the merger:
Average Annual Total Returns (for periods ended Dec. 31, 2004)
1 year 5 years 10 years
RiverSource Stock:
Class A
Return before taxes +0.36% -4.72% +7.46%
S&P 500 Index (reflects no deduction
for fees, expenses or taxes) +10.88% -2.30% +12.07%
Just horrible. But that lousy performance DISAPPEARS into RS Disciplined Equity. I would simply never own an RS-Ameriprise product. If you're already with VG then you're on the right track.
Cheers,
Jim
There are so many things to say about this fund. A few thoughts and I'll post more:
This fund launched in 2003 was TINY with a few hundred million in assets and a mediocre, but not lousy performance record. In march of 2006, Ameriprise merged the RS Stock fund with $1.8 BILLION in assets and a negative 4.2% five-year return into this new one. WHY? To hide the horrible recent performance of the Stock Fund. Now the fund has over $2 Billion in assets, but the performance data is only for the last few years on a fraction of that amount under management. Hope that makes some sense. FYI: the Stock Fund had been around 61 years!
Here's an excerpt from the prospectus for RS Stock issued four months before the merger:
Average Annual Total Returns (for periods ended Dec. 31, 2004)
1 year 5 years 10 years
RiverSource Stock:
Class A
Return before taxes +0.36% -4.72% +7.46%
S&P 500 Index (reflects no deduction
for fees, expenses or taxes) +10.88% -2.30% +12.07%
Just horrible. But that lousy performance DISAPPEARS into RS Disciplined Equity. I would simply never own an RS-Ameriprise product. If you're already with VG then you're on the right track.
Cheers,
Jim
#3
Posted 03 February 2008 - 08:32 AM
Jim is most correct. I speak from experience having been duped by this outfit when it was called/owned by American Express. They have several issues and class action suits pending as well.
Their funds stink too!!
Tony
Jim is most correct. I speak from experience having been duped by this outfit when it was called/owned by American Express. They have several issues and class action suits pending as well.
Their funds stink too!!
Tony
#4
Posted 03 February 2008 - 09:46 AM
Many thanks to both Jim and Tony. I know I need to sell this Riversource fund, my question is do it now with the market down? My famiiy thinks that this is a terrible time to sell it but I don't think they realize what a klinker AQEAX is. Since it was an inherited fund, I think I would be taxed on 15% capital gains on approx. 4k as the cost basis at the time of inheritance was around 74K. Is this thinking faulty or correct? Tax events always worry me. Many thanks! Emmie
#5
Posted 03 February 2008 - 11:11 AM
EMMIE ,
Since the market is somewhat down why not dump it now and owe less on your cost basis.
I wouldn't wait to dump it. Remember Vanguard funds are probably down too. So it will work out when the market pumps up.
I learned long ago what a great feeling it is to simply move on. Go ahead and get rid of it.
Tony
#6
Posted 03 February 2008 - 01:59 PM
QUOTE(emmie1 @ Feb 3 2008, 09:46 AM) 
Many thanks to both Jim and Tony. I know I need to sell this Riversource fund, my question is do it now with the market down? My famiiy thinks that this is a terrible time to sell it but I don't think they realize what a klinker AQEAX is. Since it was an inherited fund, I think I would be taxed on 15% capital gains on approx. 4k as the cost basis at the time of inheritance was around 74K. Is this thinking faulty or correct? Tax events always worry me. Many thanks! Emmie
There is no long term capital gains tax in 2008-2010 for taxpayers in the 15% bracket. Also stocks inherited from a decedent are eligible for stepped up basis to the fair market value of the stock on the date of death which means that only the FMV over the stepped up basis is taxed as LTCG is tax is due.
#7
Posted 03 February 2008 - 08:15 PM
Intruder said, "There is no long term capital gains tax in 2008-2010 for taxpayers in the 15% bracket. Also stocks inherited from a decedent are eligible for stepped up basis to the fair market value of the stock on the date of death which means that only the FMV over the stepped up basis is taxed as LTCG is tax is due."
[quote]
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
[quote]
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
#8 Guest_Skeptical_*
Posted 06 February 2008 - 06:02 PM
QUOTE(emmie1 @ Feb 3 2008, 07:15 PM)
Intruder said, "There is no long term capital gains tax in 2008-2010 for taxpayers in the 15% bracket. Also stocks inherited from a decedent are eligible for stepped up basis to the fair market value of the stock on the date of death which means that only the FMV over the stepped up basis is taxed as LTCG is tax is due."
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
Perhaps Intruder just overlooked the very reasonable question(s) posted by Emmie. Then again there is little troll "bait" there for the "TRUDER". No fun it seems. I for one thinks Emmie deserves an additional response from our in house "expert". hmmm?
LOL,
Jim
#9
Posted 07 February 2008 - 02:23 AM
QUOTE(Skeptical @ Feb 6 2008, 06:02 PM)
QUOTE(emmie1 @ Feb 3 2008, 07:15 PM)
Intruder said, "There is no long term capital gains tax in 2008-2010 for taxpayers in the 15% bracket. Also stocks inherited from a decedent are eligible for stepped up basis to the fair market value of the stock on the date of death which means that only the FMV over the stepped up basis is taxed as LTCG is tax is due."
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
Thank you Intruder. I just want to make sure that I'm on the same page. Does this make a difference if I am in the 25% tax bracket? I checked the value of AQEAX against the value two years ago. It looks like the stepped up basis for LTCG is approximately $11K. Am I correct in thinking that I would pay 15% of $11K in LTCG tax? I can't imagine that I would not pay anything to the government on the sale and reinvestment of this money--I'm not that lucky. Thanks! Emmie
Perhaps Intruder just overlooked the very reasonable question(s) posted by Emmie. Then again there is little troll "bait" there for the "TRUDER". No fun it seems. I for one thinks Emmie deserves an additional response from our in house "expert". hmmm?
LOL,
Jim
Unlike you who has lots of free time after 3pm there are posters who have full time jobs and only have a limited amount of time to devote to correcting erroneous posts on such topics as what is the life expectancy period for determiing the MRD when a non spouse is a beneficiary which obviously is beyond your ability to answer as is any other tax question.
If you took the time to reaearch the matter @ irs.gov you will find that for taxpayers above the 15% tax bracket the capital gains rate on stocks sold in 2008 is generally 15%. But a tax advisor should be consulted.
#10
Posted 07 February 2008 - 02:38 AM
QUOTE(tony @ Feb 3 2008, 08:11 AM)
EMMIE ,
Since the market is somewhat down why not dump it now and owe less on your cost basis.
I wouldn't wait to dump it. Remember Vanguard funds are probably down too. So it will work out when the market pumps up.
I learned long ago what a great feeling it is to simply move on. Go ahead and get rid of it.
Tony
I agree with Tony.
You will also have to find out the market value on the date on death. That will be your official cost basis from which profits or losses are calculated.
#11 Guest_Skeptical_*
Posted 07 February 2008 - 07:54 AM
QUOTE
Intruder says: Unlike you who has lots of free time after 3pm there are posters who have full time jobs and only have a limited amount of time
Boorish behavior? You sir are quick to throw the insults. I just make the observation that you enjoy being rude and are here for that purpose, not to provide an exchange of information or ideas. Emmie (an actual investor) asked a very reasonable follow up question that you ignored for several days. Couldn't you find a moment to answer a pretty simple question by someone who was gracious enough to thank you twice in the same post?
Perhaps her original post provided the answer when she said," It has now lost back to the original cost ratio it was at when I inherited it", which I think would mean, no capital gain and thus no tax.
Cheers,
Jim
#12
Posted 07 February 2008 - 02:17 PM
Jim,
When intruder starts insulting just push the report button. He will evenually seal his own fate.
Tony
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