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1.
Contributions to variable annuities grow tax-deferred until you take them out at retirement.
True. That is one of their big attractions.
2.
If you're considering selling an appreciated investment that you bought 11 months ago, why might it make sense to hold it another month before selling it?
Because the capital gains tax would be lower after the 12 months. The lower capital gains tax can be quite an advantage for you.
3.
Exchange-traded funds _______ pass capital gains taxes to their shareholders.
Do not. ETFs only generate taxes by owning dividend-paying stocks or by changing their holdings to reflect changes in their indexes.
4.
Imagine you're a tax-sensitive investor. Which is the better bond for you?
It depends on your tax bracket. Investors in high tax brackets may benefit more from a muni--even if it has a lower yield--due to the tax break.
5.
How do tax-managed funds limit shareholders' tax burdens?
They avoid dividend-paying stocks, they hold securities for a long time, and they sell losing stocks to offset gains in winning stocks. Tax-managed funds use a variety of strategies--not just one--to limit taxes.
