Mother of All Tax Loss Harvesting Threads

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arcticpineapplecorp.
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Re: Mother of All Tax Loss Harvesting Threads

Post by arcticpineapplecorp. » Mon Jun 29, 2020 3:37 pm

livesoft wrote:
Mon Jun 29, 2020 1:40 pm
I'm surprised to see a thread from 2008 come back to life.

You and your mom should not worry at all about anything in her 401(k) having anything to do with creating a wash sale in her taxable account. So you are asking questions about something that will not matter at all.

#2. Yes, that is true, but if it wasn't, so what?
thanks.

#1. did I misread that reinvestment and/or purchases in retirement accts (assumed 401k) could create a wash sale if occurred within 30 days before/after a sale of same investment in taxable? Was this only applicable to IRA purchases and not 401k? That was not my understanding, but perhaps I read wrong?

#2. if it wasn't, I assume it would create a wash sale, which, while after reading numerous times is "not illegal" is something I'm trying to avoid whenever possible.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

retiredjg
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Re: Mother of All Tax Loss Harvesting Threads

Post by retiredjg » Mon Jun 29, 2020 3:46 pm

arcticpineapplecorp. wrote:
Mon Jun 29, 2020 3:37 pm
#1. did I misread that reinvestment and/or purchases in retirement accts (assumed 401k) could create a wash sale if occurred within 30 days before/after a sale of same investment in taxable? Was this only applicable to IRA purchases and not 401k? That was not my understanding, but perhaps I read wrong?
Nobody knows the answer. People have opinions about the answer. Some think that 401ks are included in wash sales. Some think they are not.

The only thing the IRS has told us for sure is that a person's IRA and even the spouse's IRA would be included. They were silent on whether 401ks are also included. People interpret that silence differently - in opposite ways in fact.

This is not a suggestion for what you should do, but I would not worry about it in your situation. If you are worried, hold total stock in taxable and 500 index in the 401k. That makes it a non-issue.

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arcticpineapplecorp.
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Re: Mother of All Tax Loss Harvesting Threads

Post by arcticpineapplecorp. » Mon Jun 29, 2020 3:54 pm

retiredjg wrote:
Mon Jun 29, 2020 3:46 pm
arcticpineapplecorp. wrote:
Mon Jun 29, 2020 3:37 pm
#1. did I misread that reinvestment and/or purchases in retirement accts (assumed 401k) could create a wash sale if occurred within 30 days before/after a sale of same investment in taxable? Was this only applicable to IRA purchases and not 401k? That was not my understanding, but perhaps I read wrong?
Nobody knows the answer. People have opinions about the answer. Some think that 401ks are included in wash sales. Some think they are not.

The only thing the IRS has told us for sure is that a person's IRA and even the spouse's IRA would be included. They were silent on whether 401ks are also included. People interpret that silence differently - in opposite ways in fact.

This is not a suggestion for what you should do, but I would not worry about it in your situation. If you are worried, hold total stock in taxable and 500 index in the 401k. That makes it a non-issue.
thanks very much. that's what I was planning on doing, but it's good to know if I needed a 4th fund (aside from VTSAX Total Stock Market Index, VLCAX Large-cap index, VTCLX Tax-managed capital appreciation) then S&P500 could be used with likely little impact. Thanks. My mom's not yet ready to go with taxable, but I'm spending the time between now and then to learn as much as I can.

I still have pub 564 and 550 to read through so I'm sure I'll see it there (about IRAs, but crickets on 401ks).

also, I saw a dead link a few times (in this post) to the fairmark post regard TLH but found it on one of the other threads I linked. So for those who want it (good examples here to review):

https://web.archive.org/web/20170404145 ... /index.htm
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

jason2459
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Re: Mother of All Tax Loss Harvesting Threads

Post by jason2459 » Mon Jun 29, 2020 3:58 pm

Fyi pub 564 is for historical use only. It's been archived. Only pub 550 is active and used for reference by the IRS.

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arcticpineapplecorp.
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Re: Mother of All Tax Loss Harvesting Threads

Post by arcticpineapplecorp. » Mon Jun 29, 2020 6:46 pm

jason2459 wrote:
Mon Jun 29, 2020 3:58 pm
Fyi pub 564 is for historical use only. It's been archived. Only pub 550 is active and used for reference by the IRS.
thank you. that saves me some reading.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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