A 351 exchange is a strategic way to transfer a diversified portfolio of assets, typically individual stocks, into a newly created Exchange Traded Fund (ETF) to manage risk and keep investments positioned for potential growth—all without the immediate capital gains tax burden investors might fear.

Is a 351 ETF Conversion Right for You?

While a 351 exchange can be a powerful, tax-efficient path to diversification for some investors, it isn’t a universal fit.

The 351 exchange is a complex transaction subject to IRS regulations, SEC requirements, and potential market risks. Investors should consult with qualified legal, tax, and financial professionals to assess whether a 351 exchange aligns with their specific circumstances and investment objectives.

Here’s the process: When investors contribute a diversified mix of securities to a newly established ETF, they receive ETF shares in return. To ensure the contributions meet specific IRC diversification rules, thy are rigorously checked.

These aren’t arbitrary hurdles; they’re the gates to a non-taxable event. When all conditions are met, the contributing portfolio transfers without an immediate tax on gains. And because ETFs don’t typically distribute capital gains, investors face taxes when selling ETF shares. This offers control over the timing of a tax event—which we believe is a strong behavioral advantage in managing wealth.

Quick Reference Guide to 351 Exchange for ETF

Quick Reference Guide to 351 Exchange for ETF

A 351 exchange into an ETF involves contributing securities in kind to a newly formed exchange-traded fund (ETF) in return for ETF shares. This approach allows investors to maintain market exposure without triggering capital gains taxes.

Two Portfolio Examples

Frequently Asked Questions & Timeline: 351 ETF EXCHANGE

For advisors with high-net-worth clients holding highly appreciated stocks, the 351 ETF Exchange is a tax-intelligent strategy. Our educational handbook details the process, eligibility, timeline, and advantages over traditional options, helping investors unlock wealth and optimize long-term financial outcomes.

Eben Burr & Meb Faber Unpack the 351 ETF Exchange: The Future of Tax-Smart Investing

In ep 6 of the “Crux” Eben Burr and guest, Meb Faber tackle the game-changing impact of 351 exchanges. Think of it like a 1031 real estate exchange, but for public securities—a potentially brilliant move for tax deferral.

Burr and Faber zero in on a common behavioral hurdle: investors trapped by massive gains in appreciated stocks or ETFs, paralyzed by looming tax bills.

While acknowledging the current “educational gap” and operational hurdles, Burr is bullish. He sees 351 ETF exchanges becoming more mainstream and simplified.

The 25/50 Rule May be a Roadblock. Here’s How to Drive Around It.

In ep 9 of the “Crux” Eben Burr and guest, Matt Bucklin, tackle the game-changing impact of 351 exchanges. They zero in on a common behavioral hurdle: the 25/50 rule that can feel like a major roadblock. Matt developed a platform that offers a simpler way for investors to quickly see if their portfolio might fit. His insights on tax deferral strategies are a game-changer.