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Avoiding Wash Sale on Multiple Accounts

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  • Avoiding Wash Sale on Multiple Accounts

    How do you do it? There has been a lot of good posts/advise on tax loss harvesting. As far as I know, the IRS considers my own accounts as well as my wife's accounts as ONE since we files taxes jointly (MFJ).


    Wife: 1. Employer sponsored plan (403b) is through Fidelity and we invest her monthly payroll deductions into low cost Spartan index funds. Self managed. Value at $100,000 2. ROTH IRA through Vanguard- all in index funds. Value at $ 40,000. Self managed.

    Me: 1. Employer sponsored plan (401k/Profit sharing plan) is an Account Under Management (AUM) for 0.24% annual fee. Our Certified Financial Planner uses Charles Schwab. Currently invested in 6 ETFs and 15 Mutual Funds. Value at $420,000 2. ROTH IRA through Vanguard- all in index funds. Value at $40,000. Self managed.

    Planning on doing a taxable account very soon. I have $75,000 to invest. I want to continue being able to do Backdoor Roth IRAs so I don't plan on transferring my AUM into a traditional IRA at Vanguard since this would subject any future Roth conversions to the Pro-Rata rule.

    Do I do self directed investment instead on my 401k/Profit sharing plan in order to obtain complete control of all the accounts? This is the only account we have that is not self directed but also has the most amount invested. If I decide to continue this AUM then do I send my Financial Planner a list of outside investments so that he avoids the wash sale rule? Do I also invest in different categories of mutual funds between our Vanguard ROTH and the (soon to be) Vanguard taxable account hoping to avoid a wash sale when I do tax loss harvesting? How have you done it?

  • #2
    To avoid the wash sale due to non-taxable accounts, I keep separate fund types in each.  Taxable gets S&P500 /  Total US stock and Total International / Developed.  Roth & tax deferred (401(k) and 457(b)) gets small and mid cap US stocks, emerging markets, REIT, and bonds.


    • #3
      Thanks PhysicianOnFIRE! If you were in my shoes would you rather have A. full control of all accounts by only doing self directed investing or B. send a list of outside investments to your CFP who manages your 401k in order for him to hopefully avoid the wash sale rule? My CFP boasts about 5% annual net return on my 401k over the last 6 years as of year end 2015.


      • #4
        WCICON24 EarlyBird
        Well I posted about this but got no replies:


        I personally would want control of everything.  That way you know what is going on and don't have to worry about the wash sale, once you know the rules.  Your AUM does seem low (by comparison to 1%), but even then the evidence would argue he has no added value to an educated self-directed investor, assuming you can stay the course..  It might be interesting to chat with your CFP about wash sale rules however and see if he knows his stuff..