Vanguard fined over $100 million for misleading tax statements in target-date funds.

From CNBC: 2025-01-23 09:54:39

Vanguard was fined over $100 million by the SEC for misleading statements about tax consequences in target-date funds. Lowering asset minimums triggered large capital gains distributions and tax liabilities for taxable brokerage account investors. Holding tax-inefficient assets in retirement accounts can boost net investment returns after taxes, especially for high earners.

Strategically holding assets in different accounts to boost after-tax returns is known as “asset location”. High earners need to consider this strategy due to contribution limits and tax efficiency. A retired couple with a $2 million portfolio could save $2,800 to $8,200 per year with proper asset location. Tax-inefficient assets are better suited for retirement accounts. 1. The United States reported over 100,000 new COVID-19 cases in a single day for the first time since February. The surge is driven by the highly contagious Delta variant, prompting renewed calls for vaccination.

2. Tesla announced plans to open its first European Gigafactory in Germany. The factory will produce batteries, powertrains, and vehicles, creating thousands of jobs in the region.

3. The Tokyo Olympics kicked off with a scaled-down opening ceremony due to COVID-19 restrictions. Athletes from around the world marched into the stadium, marking the start of the highly anticipated games.

4. A heatwave is sweeping across the western United States, with temperatures reaching record highs. Officials are urging residents to take precautions and stay hydrated as the extreme heat continues.

5. The European Union reached a landmark agreement to impose sanctions on Belarus, targeting key sectors of the economy in response to the forced landing of a Ryanair flight to arrest a dissident journalist.

Read more: Vanguard’s $106 million TDF settlement offers a key lesson about taxes