I would really appreciate your guidance with this.
I thank everyone for helping me with their inputs to my several queries so far. In response to my post regarding my finances in order, a comment by @megabad said
I had not heard the term wash sales before and reading up further led me to interesting prior discussions in the forum here. Given the possibility of a wash sale (given that i have invested in both Betterment and Wealthfront to see how they perform and the overlap in the funds held in them) as was elaborated in additional explanation:Not a big fan of Betterment and Wealthfront for taxable accounts and I don't know what funds they hold so watch out for wash sales if this applies.
i am thinking of closing one of the two accounts or possibly both. Would the fact that both accounts were open for under a month have any tax implications? Also, assuming i close both the taxable accounts, what would be a good option to move the funds to?Yes, there may be a wash sale given the overlap in fund ownership or there may not be, but it would be hard to predict if one would buy within 30 days of the other selling. I am assuming you would receive a 1099B at the end of year reporting transactions just as you do with a normal broker (I am not a Betterment/Wealthfront customer). If you executed a sell and then a buy on exactly the same ETF within 30 days, then you would have a wash sale which simply means you cannot deduct the loss this year and will have to adjust the cost basis of the holding to reflect the wash sale. Legally, not a big deal, but from a paperwork standpoint, it can become difficult since you will have to keep track of everything yourself (unless you have a "guy").
An option i'm considering that i would like to have your input:
Is it a good idea for me to request the firms to convert my current taxable account in to a Roth IRA? Because the money invested in the taxable account is already post-tax, i thought it might fit the Roth requirement.
Also, i have a question regarding the limit on contribution by income earned in a year:
- given the nature of some jobs where one would not know the total income one would earn during the year, or plain uncertainty with regard to the nature of the job, how would one know until the end of the year whether or not one qualifies for Roth IRA?