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Do you hold different funds in taxable vs tax-deferred for TLH?

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  • Do you hold different funds in taxable vs tax-deferred for TLH?

    I just recently harvested some losses in my taxable account, exchanging total international for international ex-us.   Belatedly realizing I have total international in my roth account and it paid a dividend in the last 30 days which apparently creates a wash sale.

    Given that, am curious if you guys have totally different funds in taxable vs other accounts to simplify harvesting or if you have dividends reinvested elsewhere etc.  What specific funds do you have in taxable, assuming you hold a similar one in another account?

  • #2
    Keep in mind the wash sale only applies to the very few shares equal to the dividend. The entire loss doesn't disappear. I use both the same and different funds. I reinvest dividends in tax-protected mutual funds, but not ETFs.

    You make a good argument to have your taxable account at a different institution though.
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

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    • #3
      I don't keep identical funds in both taxable and tax-deferred/Roth, precisely for avoiding the situation you described.  But, as WCI points out, the whole enchilada will not be a wash, so that event shouldn't hurt you much.

      My taxable account has Total Stock / S&P 500, and total international / developed markets.

      Tax deferred and Roth accounts have US small-caps, US mid-caps, and emerging markets (and bonds - sorry Johanna).  This arrangement gives me some tilt towards small and mid-caps, but I'm OK with that.

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      • #4




        Keep in mind the wash sale only applies to the very few shares equal to the dividend. The entire loss doesn’t disappear. I use both the same and different funds. I reinvest dividends in tax-protected mutual funds, but not ETFs.

        You make a good argument to have your taxable account at a different institution though.
        Click to expand...


        So this is an old thread but my recently sticking $ into Betterment has me thinking about wash sale rules.

        I *thought* Betterment would be able to look at the holdings in my other accounts and make purchases/sales accordingly to avoid the wash sale, but apparently even if you link external accounts they don't look at them when doing their automated TLH.

        VTI and it's equivalentsare a component (~15% of their chosen portfolio) at Betterment.  VTI is a big part of my retirement accounts and gets regular purchases.

        I've never heard/read that just the shares equal to the dividends are what the wash sale rule applies to.  If VTI is $10/share and Betterment sells 50 shares @ $500 at a loss (let's say I bought it at $20/share) and it just so happens that 2 days later my retirement account purchases $500 of VTI from a recurring contribution and it's now back at $20/share, would this not violate the wash sale rule and void my $250 capital loss from the Betterment account even if no dividends were issued in that time?

        I may be missing something basic here...
        An alt-brown look at medicine, money, faith, & family
        www.RogueDadMD.com

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        • #5
          It depends on what your retirement account is.  If you bought back shares in an IRA substantially identically identical to those claimed in a capital loss in 30 days or less, you have a wash sale. Whether the IRS would actually find out about it is a separate question.

          http://www.investopedia.com/articles/retirement/09/ira-wash-sale-rule.asp

          This ruling has not been expanded to other retirement accounts, but I still treat 401k's the same as IRAs and do not purchase substantially identical securities in taxable and tax-deferred accounts.
          I sometimes have trouble reading private messages on the forum. I can also be contacted at [email protected]

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          • #6




            It depends on what your retirement account is.  If you bought back shares in an IRA substantially identically identical to those claimed in a capital loss in 30 days or less, you have a wash sale. Whether the IRS would actually find out about it is a separate question.

            http://www.investopedia.com/articles/retirement/09/ira-wash-sale-rule.asp

            This ruling has not been expanded to other retirement accounts, but I still treat 401k’s the same as IRAs and do not purchase substantially identical securities in taxable and tax-deferred accounts.
            Click to expand...


            I'm specifically talking about 401k/403b.  Those purchases happen with paycheck deductions and can't be controlled., and I am already using what are probably the preferred investing choices within them and wouldn't change them just to jive w/Betterment.

            If it only applies to IRAs it would be easy enough to wait until the 30 days is up before making a purchase if it really is a similar/same because I can control when I make that purchase and I can turn off the TLH on Betterment for 30-60 days if necessary.
            An alt-brown look at medicine, money, faith, & family
            www.RogueDadMD.com

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