BRIDGEPORT, W.Va (WDTV)- Question: I have a taxable mutual fund account and I am not happy with my advisor. Can I transfer this to another firm, and is this a tax-free transition?
Answer (John Halterman, Beacon Wealth Management): "Hey Chris, that’s a big, big question because it’s actually very confusing for a lot of people.
Let me start with this, the first thing you have to know is that anytime you’re unhappy, you definitely have the freedom to change anytime you want. That’s not going to be an issue whatsoever.
Whether it’s taxable or not, it’s going to be based upon whether you keep it as is or, if you sell the type of account."
Question: What is the tax impact on him?
Answer (John Halterman, Beacon Wealth Management): "There are two ways. You said a couple keywords, taxable. That means you pay taxes on this account every single year. Because of that you can either transfer or in-kind. In-kind means you don’t sell everything, if you don’t sell anything of course there are no taxes. If you sell something, which is not uncommon when you transfer something, there’s definitely going to be a possible gain on that account.
That account has been taxed to you each year and maybe you reinvested dividends and capital gains. So you do have a cost basis, but at the time of the sell you could possibly have a gain. If you have that gain, you could end up paying on that gain of those accounts. Definitely, it is not tax-free and you have to look at the tax situation on that.