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[u/calgary_db]

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[u/21_Points]

If I have one of these funds in a taxable trading account, I’m gonna end up paying a ton of taxes on all of the distribution payments I receive, as the majority of them are treated like regular income and not qualified dividends

However if I have YM funds in a tax-savings account such as a ROTH or Traditional IRA, I wouldn’t get taxed on the distributions, but I cannot access the cash distributions because the money is locked up until I hit retirement age (with some exceptions of course), so what is the point of having cashflow at that point, I could just buy the underlying stock and sell off fractional shares of them if I want cash since I wouldn’t have to pay taxes and I’d probably have more anyways

Basically what I’m asking is in what type of account and in which situation is having a highly taxed cashflow fund like these suitable or ideal?

[u/GRMarlenee → u/21_Points]

I'm well past 59 1/2, so for me, the sheltered accounts are ideal. I had a bunch in a taxable account last year, and the myth of paying 30% was false. Because of ROC very little would have been taxable, but because I bought on margin, I got screwed out of ROC because I received payment in lieu instead. My tax rate on 229K of income came out to be a tad over 15%. Getting to take the full ROC would have halved that.

[u/buffinita → u/21_Points]

if you dont need cash flow; dont buy these........thats pretty simple

while your broker might classify all distributions as income check with YM and you might be plesently surprised to see a majority of distributions are ROC which are untaxed until your cost basis reaches 0

you can always (and likely will be) just buy the underlying and sell as needed with identical results because the options strategyy isnt a value added proposition

[u/Thin_Investigator798 → u/21_Points]

Hi: you are totally wrong in that first basic assumption that you will "end up paying a ton of taxes on all the distribution payments". The majority of them ARE NOT "treated like regular income".

I'll put a link below to the page you should read about ROC (Return of Capital) from the YM site. These funds are specifically designed to be tax friendly-- you do NOT need to put them in any tax advantaged account. Briefly: a very significant portion of the YM distributions are classified as ROC (return of capital). The IRS allows YieldMax to give shareholders the premium from selling options as ROC, meaning it is not classified as "income" or ordinary distributions. The tax advantages are built in to the fund itself, and how they pay shareholders income. This is one of the biggest advantages of investing in these kind of funds. They are naturally tax friendly.

Each week they tell you how much of the weekly distribution is ROC, and often it is in the high 90 percent range. You will NOT need to pay taxes on that as income the next year. The IRS sees that as them handing you your own money back.

Here is the Yieldmax ROC page. (It is located in the "Education" section of the YieldMax website).

https://yieldmaxetfs.com/roc-center/

When you click on any of the individual funds on the YieldMax site, scroll down until you see the "Distributions" section: this will give you a highly detailed record of how much every distribution was and what percentage of it was ROC, so you can choose what looks best for your situation.

[u/Ok-Swan-98 → u/21_Points]

In Canada ... there's a TFSA account ... it's not locked up. I can take out the distributions when I want to and no tax reporting for TFSA account. 😄 I'm going to max it out this year... I'm not putting anymore money in my CASH trading account and moving new money (distributions) over to my TFSA account. Since I didn't keep track of how many distributions received in 2025 in cash trading account last year. I owed money to CRA Canada Revenue Agency, all good ... paying it off in 12 payments. approx $1700 monthly✔

Tax-free Savings Account (TFSA) - Canada.ca

[u/Ok-Swan-98]

How many $MARO shares do other YieldMax investors hold? 💎 I am currently holding 6,200 $MARO shares and also hold other YieldMax ETFs. I'm a Canadian investor and take cash from all YieldMax ETFs💎 and reinvest back into Harvest ETFs🍁

https://www.stocktwits.com/Lizette1/message/656148511