Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I'm a little confused by your question. You start out by saying
"I'm thinking about redeeming my non-401k mutual funds and starting a foolish 4 stock plan."
but then you talk about tax ramifications of a Foolish 4 strategy "compared with not dealing with taxes until you are retired with a 401k" Sounds like a contradiction to me.

If you are thinking about taking money out of your 401k to invest in the Foolish 4, and you are not older than 59.5 years, that is definitely a Bad Idea! You will pay a bunch of penalties for the early withdrawal, and then pay tax every year on the earnings and/or capital gains you realize. It is not even something to debate.

On the other hand if you simply want to compare two investment strategies (mutual fund vs Foolish 4) with both being executed in a taxable account (which is what I assume you mean by "non-401k"), then in my opinion the tax ramifications are a non-issue. The only reason you would pay more taxes on a Foolish 4 portfolio is because you will be MAKING MORE MONEY!! ... for which you will be quite happy.

Let me know if I misinterpreted your question.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.