Funds for taxable account

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
elderwise
Posts: 14
Joined: Fri Jul 22, 2016 10:27 am

Funds for taxable account

Postby elderwise » Fri Mar 17, 2017 11:51 am

Hi Bogleheads,

Currently maxing 401k, 457B, Roth IRA(Him+Her) 25% bracket, IL state govt Job Pension DB, 32 YO.

Have enough EF ~6+ months, no debt / mortgage.cars paid off.

Have around 5-10K spare for investing in taxable account. Need advice,

Which funds? preferable vanguard have roth ira and old employer plan / account there already.

I don't currently have a taxable account, say if i dump 10K and need it after 5 months and it generated earnings, are only earnings taxed? since the money i put in is of course post tax?

Most of my Tax advantage accounts are primarily Total Stock,

Thanks!

User avatar
Pranav
Posts: 102
Joined: Thu Aug 25, 2016 11:25 am
Location: Austin, Texas, United States

Re: Funds for taxable account

Postby Pranav » Fri Mar 17, 2017 12:29 pm

For taxable accounts, the-money-you-put-in (also known as the-basis) will not be taxed. The earning and dividends will be taxable.

For money that would be used in 5 months, I would keep it in a high-yield savings accounts.

For long-term investments in taxable accounts, I would choose Total Stock Market Index Mutual Fund.
Pranav

misscourtneyk
Posts: 8
Joined: Mon Dec 19, 2016 11:42 am

Re: Funds for taxable account

Postby misscourtneyk » Fri Mar 17, 2017 1:43 pm

Total Stock Market works well for taxable accounts.

onourway
Posts: 193
Joined: Thu Dec 08, 2016 3:39 pm

Re: Funds for taxable account

Postby onourway » Fri Mar 17, 2017 1:57 pm

A broad market index fund. Preferably one that is different than you hold in your other accounts so if you wish to take advantage of tax-loss harvesting you don't trigger an inadvertent wash sale.

kgressler
Posts: 78
Joined: Wed Dec 16, 2015 3:58 pm
Location: St Louis MO

Re: Funds for taxable account

Postby kgressler » Fri Mar 17, 2017 2:16 pm

onourway wrote:A broad market index fund. Preferably one that is different than you hold in your other accounts so if you wish to take advantage of tax-loss harvesting you don't trigger an inadvertent wash sale.


So ,If I hold TSM in my Roth, wife own it in her 401k, and I hold it in my taxable. If i sell in my taxable its a wash sale and not eligible for TLH?
I did not know this. I already own the 500 index fund in my Simple so i cant move funds there either.

onourway
Posts: 193
Joined: Thu Dec 08, 2016 3:39 pm

Re: Funds for taxable account

Postby onourway » Fri Mar 17, 2017 2:31 pm

kgressler wrote:
So ,If I hold TSM in my Roth, wife own it in her 401k, and I hold it in my taxable. If i sell in my taxable its a wash sale and not eligible for TLH?
I did not know this. I already own the 500 index fund in my Simple so i cant move funds there either.


It will turn into a wash sale as soon as you automatically purchase more shares in those accounts either through automatic savings mechanisms or dividend reinvestment.

User avatar
BL
Posts: 6601
Joined: Sun Mar 01, 2009 2:28 pm

Re: Funds for taxable account

Postby BL » Fri Mar 17, 2017 2:46 pm

onourway wrote:
kgressler wrote:
So ,If I hold TSM in my Roth, wife own it in her 401k, and I hold it in my taxable. If i sell in my taxable its a wash sale and not eligible for TLH?
I did not know this. I already own the 500 index fund in my Simple so i cant move funds there either.


It will turn into a wash sale as soon as you automatically purchase more shares in those accounts either through automatic savings mechanisms or dividend reinvestment.

The 401k is sort of a grey area since it is not mentioned in the IRS regs, but IRAs are mentioned. So some follow the "safe" conservative idea of not having the same as taxable while many just concentrate on IRAs and taxable funds.

kgressler
Posts: 78
Joined: Wed Dec 16, 2015 3:58 pm
Location: St Louis MO

Re: Funds for taxable account

Postby kgressler » Mon Mar 20, 2017 10:57 am

BL wrote:
onourway wrote:
kgressler wrote:
So ,If I hold TSM in my Roth, wife own it in her 401k, and I hold it in my taxable. If i sell in my taxable its a wash sale and not eligible for TLH?
I did not know this. I already own the 500 index fund in my Simple so i cant move funds there either.


It will turn into a wash sale as soon as you automatically purchase more shares in those accounts either through automatic savings mechanisms or dividend reinvestment.

The 401k is sort of a grey area since it is not mentioned in the IRS regs, but IRAs are mentioned. So some follow the "safe" conservative idea of not having the same as taxable while many just concentrate on IRAs and taxable funds.


So what are my options if i want to TLH then? I suppose the only thing i could do is sell and leave it in a money market for the 30 days?

mortfree
Posts: 265
Joined: Mon Sep 12, 2016 7:06 pm

Re: Funds for taxable account

Postby mortfree » Mon Mar 20, 2017 11:00 am

I am buying the ETF, ishares Total Stock Market (ITOT) tomorrow since I hold VTI (ETF for vanguard total stock) in my Roth account.

i think this would eliminate any potential wash sale should I sell ITOT. even if my wife holds ITOT in her Roth IRA since the taxable account is not a joint account.

User avatar
WallStreetPhysician
Posts: 83
Joined: Tue Jan 17, 2017 12:09 pm
Contact:

Re: Funds for taxable account

Postby WallStreetPhysician » Mon Mar 20, 2017 1:51 pm

You're on the right track. I would buy VTSAX. If you sell it in 5 months, you will pay short-term capital gains tax (or take a tax loss). If you want bonds, use your retirement accounts for that allocation.

Theoretical
Posts: 901
Joined: Tue Aug 19, 2014 10:09 pm

Re: Funds for taxable account

Postby Theoretical » Mon Mar 20, 2017 4:21 pm

mortfree wrote:I am buying the ETF, ishares Total Stock Market (ITOT) tomorrow since I hold VTI (ETF for vanguard total stock) in my Roth account.

i think this would eliminate any potential wash sale should I sell ITOT. even if my wife holds ITOT in her Roth IRA since the taxable account is not a joint account.


ITOT's far too similar to be comfortable. While it technically uses a different index, the intent is to be a "total" fund and the holdings are basically the same. Honestly, I'd use IVV - S&P 500 or a 50/50 of IUSV and IUSG (S&P 900 Value and Growth).

mortfree
Posts: 265
Joined: Mon Sep 12, 2016 7:06 pm

Re: Funds for taxable account

Postby mortfree » Mon Mar 20, 2017 4:41 pm

Theoretical wrote:
mortfree wrote:I am buying the ETF, ishares Total Stock Market (ITOT) tomorrow since I hold VTI (ETF for vanguard total stock) in my Roth account.

i think this would eliminate any potential wash sale should I sell ITOT. even if my wife holds ITOT in her Roth IRA since the taxable account is not a joint account.


ITOT's far too similar to be comfortable. While it technically uses a different index, the intent is to be a "total" fund and the holdings are basically the same. Honestly, I'd use IVV - S&P 500 or a 50/50 of IUSV and IUSG (S&P 900 Value and Growth).


Thanks for taking the time to comment.

Is this from a TLH perspective or from a general investing pointing of view suggesting not to purchase ITOT given that I own VTI? If for TLH purposes, I have held SPY since 2004 in my taxable so I could always just add to that.

I did not put the order through for ITOT today; I will just add to my position in BRK-B on Tuesday.


Return to “Investing - Help with Personal Investments”

Who is online

Users browsing this forum: ACM4297, aristotelian, asdf1, bubbadog, deltaneutral83, desiderium, Five, JDCarpenter, jlcnuke, Justalearner, Karamatsu, lemme think, MoonOrb, newtoit, RadAudit, tomer755, Yahoo [Bot] and 56 guests