After years of stock market growth, many investors are sitting on large profits in taxable accounts, which could trigger hefty capital gains when sold.
That bill can be significant for wealthy Americans, with a 20% top capital gains rate, plus 3.8% net investment income tax, depending on earnings.
One solution, known as a 351 conversion or exchange, allows higher earners to transform appreciated assets into shares of new exchange-traded funds. The strategy seeds ETFs before launch, and the original investor defers capital gains until selling their shares.
For some investors, the strategy is “like magic,” said certified financial planner David Haas, president of Cereus Financial Advisors in Franklin Lakes, New Jersey.
Here’s a look at other stories offering insight on ETFs for investors.
