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<< I've since decided to open an account with Waterhouse, and go it alone (well, not really, since a Fool is never alone). My trouble is this. TDWatehouse says that American Express funds (IDS) are proprietary, and that we have to liquidate our funds with them to reinvest with Waterhouse. 1st dumb question, am I taxed for this? Waterhouse is saying no, but I find that very hard to believe. I'm thinking that since it has been less than a year, I will be taxed at my personal income tax rate. >>

You will be taxed at your ordinary income rate for the gain on the sale. For more information on how to calculate your gain, see the FAQ.

<< Second question, we have two ROTH's as well, which are invested in IDS funds too. When I liquidate the funds, can I keep the Roth's open and transfer them to Waterhouse? Or, do I have to close them and start over. Obviously, I would like to keep them, and not have to start over. >>

What you want to do is a trustee-to-trustee transfer of your IRAs. IDS will liquidate the funds and transfer the cash to your new trustee. Waterhouse should have all the forms you need to accomplish this.

Phil Marti
Tax Preparer
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