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  • abds
    replied
    Originally posted by Codfish View Post

    I believe you misunderstand wash sale rules. The following is a quote from POF

    https://www.physicianonfire.com/tax-...ting-vanguard/

    "What you want to avoid in the 30-day window before and after tax loss harvesting is a wash sale. A wash sale is a purchase of identical or “substantially identical” replacement shares of an asset you sold at a loss during that 61-day (30 days before and 30 days after, plus the day of the sale) timeframe."

    The question proposed was selling total market and buying SP500 while still periodically buying SP500 in 401K. in this scenario, SP500 is the replacement share of an asset sold at a loss (total market). You can not buy a replacement share in that 61 day window without triggering a wash sale.
    I don’t know of anyone who considers S&P500 and total market funds substantially identical. Hence no wash sale. I am very open to hearing why I’m wrong, but based on your explanation I’m still right.

    Leave a comment:


  • Codfish
    replied
    Originally posted by dayman View Post

    You can't buy more of what you just sold ("replacing" those shares). In this scenario, the asset he sold at a loss is the total market fund. Buying more SP500 is fine. He just can't buy more total market.
    Got it, thanks for clarifying.

    Leave a comment:


  • dayman
    replied
    Originally posted by Codfish View Post

    I believe you misunderstand wash sale rules. The following is a quote from POF

    https://www.physicianonfire.com/tax-...ting-vanguard/

    "What you want to avoid in the 30-day window before and after tax loss harvesting is a wash sale. A wash sale is a purchase of identical or “substantially identical” replacement shares of an asset you sold at a loss during that 61-day (30 days before and 30 days after, plus the day of the sale) timeframe."

    The question proposed was selling total market and buying SP500 while still periodically buying SP500 in 401K. in this scenario, SP500 is the replacement share of an asset sold at a loss (total market). You can not buy a replacement share in that 61 day window without triggering a wash sale.
    You can't buy more of what you just sold ("replacing" those shares). In this scenario, the asset he sold at a loss is the total market fund. Buying more SP500 is fine. He just can't buy more total market.

    Leave a comment:


  • Codfish
    replied
    Originally posted by abds View Post

    Either you are misunderstanding the question, or I misunderstand wash sale rules. Ophtho2 at no point in their plan is selling an S&P500 fund for a loss. They are planning to TLH VTI (total market) in taxable, and in those situations buy VOO (SP500). These should be no issues with buying SP500 every 2 weeks in their 401k.

    The issue would potentially arise if they want to TLH (sell) VOO in taxable, while periodically buying VOO (or other SP500) in the 401k. But that wasn’t the question.
    I believe you misunderstand wash sale rules. The following is a quote from POF

    https://www.physicianonfire.com/tax-...ting-vanguard/

    "What you want to avoid in the 30-day window before and after tax loss harvesting is a wash sale. A wash sale is a purchase of identical or “substantially identical” replacement shares of an asset you sold at a loss during that 61-day (30 days before and 30 days after, plus the day of the sale) timeframe."

    The question proposed was selling total market and buying SP500 while still periodically buying SP500 in 401K. in this scenario, SP500 is the replacement share of an asset sold at a loss (total market). You can not buy a replacement share in that 61 day window without triggering a wash sale.

    Leave a comment:


  • abds
    replied
    Originally posted by Codfish View Post
    It is not as long as you have not purchased a SP 500 fund in the 30 days prior to, the day of, or 30 days following your TLH. You mentioned you are holding a SP500 fund in a 401K. You need a plan for how you are going to avoid purchasing new shares of an SP500 fund in your 401K (including any dividends that are automatically reinvested) for your TLH plan to work.
    Either you are misunderstanding the question, or I misunderstand wash sale rules. Ophtho2 at no point in their plan is selling an S&P500 fund for a loss. They are planning to TLH VTI (total market) in taxable, and in those situations buy VOO (SP500). These should be no issues with buying SP500 every 2 weeks in their 401k.

    The issue would potentially arise if they want to TLH (sell) VOO in taxable, while periodically buying VOO (or other SP500) in the 401k. But that wasn’t the question.

    Leave a comment:


  • Larry Ragman
    replied
    Just to be clear, while some say it is a grey area the actual IRS revenue ruling does not address wash sales in 401ks. It does say the same fund in taxable and an IRA would create a wash sale. Still, it is easy to avoid any concern at all by picking a different TLH partner.

    Leave a comment:


  • Ophtho2
    replied
    Originally posted by dayman View Post

    No. But it's a problem if you ever want to TLH from the SP500 fund back into VTI.

    You can avoid this by using a different TLH partner in taxable (for example, the Vanguard Large Cap Index).
    Got it. Thank you both for the advice.

    Leave a comment:


  • dayman
    replied
    Originally posted by Ophtho2 View Post

    Would it be a wash sale if when tax loss harvesting I'm selling a total stock market fund and then buying a SP500 fund in a taxable? Assuming I'm not buying total stock market funds in taxable or 401ks for >30 days
    No. But it's a problem if you ever want to TLH from the SP500 fund back into VTI.

    You can avoid this by using a different TLH partner in taxable (for example, the Vanguard Large Cap Index).

    Leave a comment:


  • Codfish
    replied
    It is not as long as you have not purchased a SP 500 fund in the 30 days prior to, the day of, or 30 days following your TLH. You mentioned you are holding a SP500 fund in a 401K. You need a plan for how you are going to avoid purchasing new shares of an SP500 fund in your 401K (including any dividends that are automatically reinvested) for your TLH plan to work.

    Leave a comment:


  • Ophtho2
    replied
    Originally posted by Codfish View Post

    Not ideal. You’ll be periodically investing in your 401K with each paycheck into a fund that tracks the S&P 500. You plan to tax loss harvest into a fund that tracks the S&P 500 in a taxable account. This may trigger a wash sale. Law is not 100% clear regarding whether it is a wash sale if the purchases are in different account structures (401k and taxable) but most would caution you against this.
    Would it be a wash sale if when tax loss harvesting I'm selling a total stock market fund and then buying a SP500 fund in a taxable? Assuming I'm not buying total stock market funds in taxable or 401ks for >30 days

    Leave a comment:


  • Codfish
    replied
    Originally posted by Ophtho2 View Post
    I have a question about portfolio construction to allow for tax loss harvesting and wanted to make sure I am setting this up correctly. I recently started a taxable account (with Merrill Edge/BOA) where I can purchase VTI Vanguard Total Stock Market Index Fund ETF. My plan was to hold VTI long term in taxable and then when the situation presents itself, use Vanguard SP 500 ETF (VOO) as a TLH partner. In all my other tax advanage accounts (401Ks, etc), I was planning to hold SP500 index funds for my long term investments--for example FXAIX Fidelity 500 Index Fund rather than the Fidelity Total Market Index fund FSKAX. Does this sound like a good plan?

    Thanks in advance.




    Not ideal. You’ll be periodically investing in your 401K with each paycheck into a fund that tracks the S&P 500. You plan to tax loss harvest into a fund that tracks the S&P 500 in a taxable account. This may trigger a wash sale. Law is not 100% clear regarding whether it is a wash sale if the purchases are in different account structures (401k and taxable) but most would caution you against this.

    Leave a comment:


  • Ophtho2
    replied
    I have a question about portfolio construction to allow for tax loss harvesting and wanted to make sure I am setting this up correctly. I recently started a taxable account (with Merrill Edge/BOA) where I can purchase VTI Vanguard Total Stock Market Index Fund ETF. My plan was to hold VTI long term in taxable and then when the situation presents itself, use Vanguard SP 500 ETF (VOO) as a TLH partner. In all my other tax advanage accounts (401Ks, etc), I was planning to hold SP500 index funds for my long term investments--for example FXAIX Fidelity 500 Index Fund rather than the Fidelity Total Market Index fund FSKAX. Does this sound like a good plan?

    Thanks in advance.





    Leave a comment:


  • CordMcNally
    replied
    As long as the specified time frame has passed, you can buy back into the original fund(s) without it being a wash sale.

    Leave a comment:


  • gap55u
    replied
    Followup question: I can TLH about 1K in VTI. I saw that ITOT - ishares Core S&P Total Index - is really substantially the same so a good TLH partner. Some of my VTI has a gain. Seems OK for me to have some VTI (with capital gains) and some ITOT (purchased with losses from VTI). As long as I wait 31 days, if there are losses in ITOT, I could TLH ITOT back to VTI, correct? Or, TLH more VTI to more ITOT at any time, presuming additional losses in VTI. Thanks!

    Leave a comment:


  • CordMcNally
    replied
    Typically, you keep it in the partner fund. That's why it's important to only TLH into funds you're ok with holding forever.

    Leave a comment:

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