ROC
ROC Energy Acquisition Corp. Common Stock
stock NASDAQ

Thanks. Could you share does you’ve seen that have reported ROC via 1099 or K1?

I’ve found many of the CEFs already mentioned to be excellent *post retirement* for a dude like me who just wants the steady monthly income without the bother of selling assets monthly. I was previously invested in growth during my “accumulation” phase in life and then converted the assets to div producers, eventually settling on mostly CEFs. When I started, I avoided funds heavy on ROC, but later have added funds with “good ROC”, i.e. ROC is part of the div without NAV erosion. Obviously, I’m not reinvesting the divs since I’m living off the income. My CEF “bucket” is only one part of my retirement income strategy, but has worked out far better than I planned. I needed to make 6-7% pretax to be comfortable but currently clearing 8-9%. Portfolio principal wobbles up and down slightly (currently up about 5%), but div bucks roll in consistently. I don’t sweat taxes as I’ve priced them into the expense budget.

Do you hold these in a taxable account? If so, any idea of the amount of ROC you’ve received in prior tax years? Thanks.

Yes you will be taxed even if you use dividend reinvestment. However the comment just before yours was referring to SPYI and QQQI They take extra steps to get some of the dividned classified as return of captial ROC dividends are not taxed and just reduce your cost basis. So in the future when you sell you will get mostly long term capital gains. But those funds cannot convert all of there dividends to ROC. So What is left is still taxed. So overall they greatly reduce your taxes on the dividend. Los other funds cannot do that.

Whoever bought my $1.5 and $2.0 2 DTE CSPs yesterday. Thank you for the quick 13% ROC as they expire worthless lol.

This is not subjective, it is called Return of Capital (ROC). Please learn how your investments work.

A critical risk for any high-distribution fund is the potential for Net Asset Value (NAV) erosion. If a fund's total return over a period is less than its distribution rate, the fund is essentially paying out more than it earns, causing the NAV per share to decline.
This can be masked in the short term by distributions classified as Return of Capital (ROC), which, while tax-deferred, are effectively the fund returning a portion of the investor's original principal. An investor must monitor the fund's total return (NAV appreciation + distributions) to ensure it is positive over the long term.
A consistently declining NAV, even with high distributions, indicates that the fund's capital base is shrinking, which is unsustainable and detrimental to long-term retirement goals. This is a significant risk for QQQI, given its very high distribution rate and short track record, and it requires diligent monitoring by the investor.
Thoughts?

If you like capped upside and relatively unprotected downside, high volatility, being paid with your own money via ROC distributions (and, as a result, shrinking cost basis), and extremely high fees for the privilege of owning it, ULTY is a perfect play.

Those funds in particular are 90-95% ROC, so they are tax deferred until your cost basis drops below zero. If you keep reinvesting, you keep your cost basis up and don’t pay most of the taxes. This makes them great long term drip candidates until you are ready to just collect the income.

near the money + earnings coming up + only 1% ROC for 4 weeks hold

also just to add on to what the user above said. With QQQI you will only pay taxes on 5% of your dividends, the rest 95% are ROC

Try GPIQ and GPIX. For 2024, their dividends were classified as > 90% return of capital. There are a number of closed end funds which invest in municipal bonds, no federal tax. Try PMF or NMZ. CEFs offer a higher dividend. Master Limited Partnerships (MLP) give out 100% ROC. There are several to choose from, like EPD ET MPLX WES.

Return of capital distributions for estate planning, someone help fill me in at it seems like it could be a good strategy for older investors. For instance, my mother is now in her 70s, she could invest into a fund that primarily gives ROC distributions and those come back mostly tax free until her cost basis is whittled down to zero, at that point distributions are capital gains. If she just holds her investment until she passes the heirs get the step up basis and can sell with little to no taxes.
What am I missing here and what other factors need to be considered?

Right now i do not pay much because i am offsetting it with pretax contributions.
I put 23k into my 457b 23k into the 401k , 8k into IRA , 8500 into HSA , 6500 in Flexspend , and i have 26,000 in deductions as well as charitable donations.
Around 20% of my distributions are ROC so those are deferred .
So i may have 100k taxable as non qualified minus my pretax contributions and deductible it is under 50k so i am in the 10 and 12%
Like last year 17k tax on the non qualified income .
With the long term and qualified it is under 12k.
I usually just take 1 month in the beginning of the year and set it aside then a portion on distributions as i pay quarterly.
I will not be able to do this after i stop working so i will take 5 years and make conversions to tax advantaged accounts when i have no income as that will help with RMDs later .
I have SS and a pension from my hybrid 401k plan .
I can prob get almost 1 million converted without going into the 24% or above .
My brokerage i will have to pay on , but my plan is to just use the distributions from the bond funds to cover taxes as i will still have them topped at 5 years then i can cut the distributions from the CC funds into a 50/50 fill and reinvest.
At that point i will be getting far more than i would ever need .
I should be at 2.5m and almost 50% is CC funds getting about 10% yield ( basically 10k a month off those and i only need 8 ) the bonds are 600,000 which is more than 5 years of what i need but they earn about 4.2% in interest between the grade a , b , corporate, floating, total, and distribution.
That is almost 2000 a month which i was sticking into growth like SCHG , IVV which i would sell 10% when the market has above 10% year to convert into more CC fund shares.
I don’t really use buckets, but tiers
1. Bonds and treasuries
2. CC funds
3. growth and broad market
4. Hi yield and dividend growth
Then i just rotate down
However because each tier has interest, dividends or distributions it has alot of flexibility for taxes.
I have irrevocable trusts set up of which i will be the fiduciary/manager with salary for tax purposes.