Having the same investments in both personal brokerage account and Roth IRA account exposes you to the dangers of wash sales rules. These rules say that, if you were to sell an investment for a loss in taxable account, but purchase a “substantially identical” invest In either your IRA account (whether Traditional or Roth), or your brokerage account within 30 days past or 30 days future, your loss can and will be disallowed.
You can most certainly refrain from buying the same funds 30 days after selling for a loss, but you cannot change the past. What if a dividend reinvestment occurred within the Roth IRA within those past 30 days window? Or even in the 30 days following your sale in taxable for loss? (dividends are usually declared once a quarter, but you are blacking out 61 days out of those quarter…)
The best way to avoid the wash sales rules is simply NOT have the same investment(s) in your Roth and taxable. This way the dividend reinvestment will not interfere with your future intended sales.
Given that you have already SWPPX in taxable, I suggest buying SWTSX in Roth instead of SWPPX. Buying and selling within the Roth account has no tax consequence. Similarly exchange your VGT to an equivalent tech heavy ETF, say QQQ.
And of course, refrain from buying SWISX in Roth IRA, as long as you also hold it in personal brokerage account.
You can most certainly refrain from buying the same funds 30 days after selling for a loss, but you cannot change the past. What if a dividend reinvestment occurred within the Roth IRA within those past 30 days window? Or even in the 30 days following your sale in taxable for loss? (dividends are usually declared once a quarter, but you are blacking out 61 days out of those quarter…)
The best way to avoid the wash sales rules is simply NOT have the same investment(s) in your Roth and taxable. This way the dividend reinvestment will not interfere with your future intended sales.
Given that you have already SWPPX in taxable, I suggest buying SWTSX in Roth instead of SWPPX. Buying and selling within the Roth account has no tax consequence. Similarly exchange your VGT to an equivalent tech heavy ETF, say QQQ.
And of course, refrain from buying SWISX in Roth IRA, as long as you also hold it in personal brokerage account.
Statistics: Posted by lakpr — Wed Jun 26, 2024 2:41 am