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REDDIT

Calculation for Tax Savings moving from Mutual Fund to ETF?

C
Apr 12, 2025 · 22:23

I'll preface this by saying I think the answer is probably a resounding "No", but I want to due my due diligence.

I'm 20+ years from retirement and already maximize my 401K and IRA (backdoor). All left over funds go into Fidelity Mutual Funds that I've had since I was a kid. As a result, I have high six figures split across multiple mutual funds.

Other than knowing to look for low expense ratios, I never truly understood the differences between Mutual Funds and ETFs until I was hit with a really high tax bill this year due to capital gains distribution in one of the funds.

I keep enough in savings that even though it sucked to send thousands to the government, it doesn't make a difference in my day-to-day.

That being said, it made me wonder if over the long-term I should be in ETFs instead of MFs to avoid this? I know selling the MFs would be a taxable event, so I'm wondering if there's any calculus I can do on what's the better option? I'm assuming it's too much money at this point to take (another) tax hit, but I also don't want to be in the position where paying a few grand in taxes each year for the next 20 years would substantially hamper my savings.