Wash sale and 401k

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stocknoob4111
Posts: 676
Joined: Sun Jan 07, 2018 12:52 pm

Wash sale and 401k

Post by stocknoob4111 » Thu Jan 10, 2019 11:26 pm

Here is the situation, I have 450 shares of VOO (S&P 500 ETF) that I want to sell and buy VTMSX (VG Small Cap) to change my overall asset allocation. Currently I have losses in all lots that total to $3k or so and this will be a ST loss. I intend to sell all lots in my taxable and I don't contribute to any S&P500 fund in my taxable or Roth.

The situation is that I have an auto contribution to FXAIX (Fidelity S&P 500) semi monthly in my 401k and this will cause a wash sale with the above.

Referring to the thread here it seems that it is rather unclear if buying substantially identical in a 401k is kosher or not.

viewtopic.php?f=1&t=172514&newpost=2602912

Any further information on whether I can just keep my 401k contributions as they are and continue with the above trades?

mschurner
Posts: 35
Joined: Sun Sep 23, 2018 11:33 pm

Re: Wash sale and 401k

Post by mschurner » Thu Jan 10, 2019 11:54 pm

Its unclear with 401k, HSA and 529 plan regarding wash sale.

I was in similar boat with S&P 500 funds in 401k. I switched my 401k contribution to different funds briefly. so that there wont be any wash sale. Other option is to keep 401k assets in Target funds if its available, so that it won't be any issues with TLH in future.
My 2 cents, hope it helps.

Topic Author
stocknoob4111
Posts: 676
Joined: Sun Jan 07, 2018 12:52 pm

Re: Wash sale and 401k

Post by stocknoob4111 » Fri Jan 11, 2019 12:20 am

Thanks, i've temporarily switched my 401k to Fidelity Small Cap. It would be good to hear if anyone has actually done this and not had any issues. There are some that say this type of activity can not even be tracked by the IRS since 401k activity is not even sent to the IRS.

rkhusky
Posts: 6868
Joined: Thu Aug 18, 2011 8:09 pm

Re: Wash sale and 401k

Post by rkhusky » Fri Jan 11, 2019 8:29 am

Brokers will also not report to the IRS wash sales between spouse's accounts, between accounts held at different brokerages, between taxable accounts and IRA accounts, or between an individual's accounts and those of corporations that he controls. The onus is on the taxpayer to correctly identify wash sales. I would not rely on the IRS not finding out about something in order to achieve a tax benefit.

For a further discussion of wash sales in 401k accounts and the like, see viewtopic.php?f=1&t=264203#p4225913 and the following post.

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