Tax gain harvesting w/ Vanguard & getting that money reinvested

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Topic Author
redrocker
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Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by redrocker » Fri Dec 22, 2017 10:09 am

I have $94,000 in VTSAX in my brokerage account, a long term gain of $24,700.

Due to lower than predicted income from rental properties, I have about $22k of additional income I could report without exceeding the income I estimated for ACA purposes (and tax purposes).

I'd like to harvest the gains prior to the end of the year. I've seen it discussed in other threads but this will be my first time doing it. I've read that Vanguard won't allow you to reinvest for 30 days unless you make it an "automatic transaction." But I haven't seen any detailed instructions how to go about that. I assumed (perhaps incorrectly) that if I called Vanguard to ask I might not get assistance if this is some kind of work around of their system. I'm also confused why they wouldn't let you reinvest immediately.

If there's any other considerations I should have in mind, please let me know.

Anyone who has done this successfully that can walk me thru this, any help would be very appreciated.

livesoft
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by livesoft » Fri Dec 22, 2017 10:13 am

As I noted before, in this post I sold VTIAX on 12/14/2015 and then on 12/15/2015 (the next day!) I bought more shares of VTIAX in the exact same account by automatic investing.

Perhaps you are simply gobsmacked at how easy it is and that is throwing you off.
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Topic Author
redrocker
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by redrocker » Fri Dec 22, 2017 10:15 am

livesoft wrote:
Fri Dec 22, 2017 10:13 am
Perhaps you are simply gobsmacked at how easy it is and that is throwing you off.
As a general rule I try to never rule out that possibility.

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redrocker
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by redrocker » Fri Dec 22, 2017 7:45 pm

livesoft wrote:
Fri Dec 22, 2017 10:13 am
I bought more shares of VTIAX in the exact same account by automatic investing.
Maybe I'm missing it but I've read the thread and I don't see an explanation for how you set up the automatic investing portion of the action.

To clarify, I'm looking to sell about $85,000 of VTSAX out of the 94,000 that I currently own. I'm looking to reinvest it back into VTSAX as soon as possible. The automatic investment option I'm looking at on Vanguard's website appears to be for recurring investments, not a one time investment. I'm also concerned about knowing how far out to schedule an automatic reinvestment but ensuring that my initial sale has cleared so that the money is in the settlement fund. Do I just wait to setup the automatic investment until I see the funds as "available to trade?"

stlutz
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by stlutz » Fri Dec 22, 2017 8:23 pm

You have to setup a recurring automatic investment and then shut it off after the first transaction has occurred.

livesoft
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by livesoft » Fri Dec 22, 2017 10:01 pm

The mutual fund sale proceeds will certainly be available the next day. I would not worry about "available to trade."

Try this: Set up an automatic investment RIGHT NOW and tell us how it worked. You can ALWAYS cancel it or skip it. DO IT NOW!
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jhfenton
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by jhfenton » Sat Dec 23, 2017 10:10 am

stlutz wrote:
Fri Dec 22, 2017 8:23 pm
You have to setup a recurring automatic investment and then shut it off after the first transaction has occurred.
+1 You can set it to automatically expire one day after the first investment.

I was also wondering if the OP could simply place the replacement buy order first and THEN place the TGH sale.

Krischi
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by Krischi » Sat Dec 23, 2017 10:50 am

livesoft wrote:
Fri Dec 22, 2017 10:01 pm
The mutual fund sale proceeds will certainly be available the next day. I would not worry about "available to trade."

Try this: Set up an automatic investment RIGHT NOW and tell us how it worked. You can ALWAYS cancel it or skip it. DO IT NOW!
I just did the exact same thing in our brokerage account, and it was accepted just fine.

I scheduled the automatic transaction to run from the settlement fund a day after the sale of the covered shares (sale on 12/26, automatic buy on 12/27). The confirmation screen also says that if less than the buy amount is available in the settlement fund, the transaction will buy with the amount that is actually available. So, you don't have to predict exactly how much the shares will sell for, and you can simply enter some fuzz that is high enough to cover market movements on the day you sell.

livesoft
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by livesoft » Sat Dec 23, 2017 10:55 am

This thread will be linked as the answer to the same question in the future.
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jhfenton
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by jhfenton » Sat Dec 23, 2017 1:21 pm

I don't see any reason one wouldn't buy $80,000 of VTSAX, clicking through the warning that the money needs to be in your settlement fund by settlement day (tomorrow). (Vanguard does let you do this.) Then sell $80,000 of VTSAX, booking the gain desired.

Bam. Zero time out of the market.

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redrocker
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by redrocker » Sat Dec 23, 2017 7:37 pm

Thanks y'all. Making the sale Tuesday. I've set up an automatic investment for Wednesday. I didn't realize (since I hadn't done this before) that if the specified amount isn't available that Vanguard would attempt to make the investment with whatever funds are available.

If I hit a snag, I'll post a followup.

Krischi
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by Krischi » Wed Dec 27, 2017 10:05 am

A quick followup: My VTSAX shares sold yesterday for $9,771.19. I had put in an auto investment from the settlement fund for today, for $9,850 to be on the safe side. Sure enough, Vanguard now shows a pending buy of VTSAX in the amount of $9,771.19, to execute today. All is well.

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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by triceratop » Wed Dec 27, 2017 10:13 am

This is an excellent case for using ETFs. I would tax gain harvest by selling VTI at 137.56 and immediately rebuy (within 5 seconds) at 137.56. No pain at all, completely convenient. I have done this plenty of times and much prefer it to the mutual fund headaches. And, there is no guarantee Vanguard will always allow these tricks.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

Topic Author
redrocker
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by redrocker » Wed Dec 27, 2017 1:12 pm

Tuesday came and went without a notification or email about the scheduled sale, although I could see the "P" for pending under my VTSAX current holdings. Got an email at 11am today saying my transaction confirmation was ready and I wasn't sure whether it was for the sale or if Vanguard had attempted fill my purchase order with the small amount that had been in my settlement fund prior.

Logged on to see my settlement fund had an available balance of $77k (the amount I elected to sell), and funds available to trade/withdraw sat at $17k (reflecting the $60k I elected to reinvest). Everything looks good so far. Thanks for the help!

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1210sda
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Re: Tax gain harvesting w/ Vanguard & getting that money reinvested

Post by 1210sda » Fri Jan 05, 2018 12:03 pm

livesoft wrote:
Fri Dec 22, 2017 10:01 pm
The mutual fund sale proceeds will certainly be available the next day. I would not worry about "available to trade."

Try this: Set up an automatic investment RIGHT NOW and tell us how it worked. You can ALWAYS cancel it or skip it. DO IT NOW!
Livesoft, you are remarkable in the straightforward advice you give. Thanks !!

1210

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