Want to avoid wash sale - advice?

[Namuh100]

Hello!

I am wanting to sell Vanguard's Tax-Managed Balance Fund (VTMFX), in my Taxable acct, and then buy Vanguard Total Stock (VTSAX), Total International (VTIAX) and Total Bond (VBMFX) funds.

Before I hit the "sell" button, Vanguard warns me that I won't be able to buy any funds similar to VTMFX (I can't remember the specific language) for the next 30 days. The three funds I want to buy are three of the four funds that make up the four-fund VTMFX fund I am selling. Will I have to wait 30 days before I can buy them? I don't think that is technically a "wash" sale, but it is my question.

Thank you in advance!

[lakpr]

No wash sale that I can see from your plan. Just don’t buy VTMFX for the next 30 days.

That warning message sounds like more of a Vanguard thing, they don’t want you to breeze in and breeze out of mutual funds, as it would drive up costs of fund maintenance if everyone does that.

[placeholder]

Hello!

I am wanting to sell Vanguard's Tax-Managed Balance Fund (VTMFX), in my Taxable acct, and then buy Vanguard Total Stock (VTSAX), Total International (VTIAX) and Total Bond (VBMFX) funds.

Before I hit the "sell" button, Vanguard warns me that I won't be able to buy any funds similar to VTMFX (I can't remember the specific language) for the next 30 days. The three funds I want to buy are three of the four funds that make up the four-fund VTMFX fund I am selling. Will I have to wait 30 days before I can buy them? I don't think that is technically a "wash" sale, but it is my question.

It says funds that are substantially identical not pieces of a fund just like you don't have to worry about selling the sp 500 fund and buying some of the components.

[rossington]

Hello!

I am wanting to sell Vanguard's Tax-Managed Balance Fund (VTMFX), in my Taxable acct, and then buy Vanguard Total Stock (VTSAX), Total International (VTIAX) and Total Bond (VBMFX) funds.

Before I hit the "sell" button, Vanguard warns me that I won't be able to buy any funds similar to VTMFX (I can't remember the specific language) for the next 30 days. The three funds I want to buy are three of the four funds that make up the four-fund VTMFX fund I am selling. Will I have to wait 30 days before I can buy them? I don't think that is technically a "wash" sale, but it is my question.

Thank you in advance!

OP, this:

No wash sale that I can see from your plan. Just don’t buy VTMFX for the next 30 days.

That warning message sounds like more of a Vanguard thing, they don’t want you to breeze in and breeze out of mutual funds, as it would drive up costs of fund maintenance if everyone does that.

Vanguard is advising you of their Frequent Trading Policy:

"Frequent-trading policy
If you sell or exchange shares of a Vanguard fund, you will not be permitted to buy or exchange back into the same fund, in the same account, within 30 calendar days."

[retiredjg]

This sounds like Vanguard's frequent trading policy to me, not a wash sale warning. No problem doing what you plan.

[Jack FFR1846]

Your plan is fine with no potential wash.

Even more closely similar, you could sell VTI and buy SCHB. Both are total US large market. But they don't follow the exact index. Heck....you could likely sell a Vanguard S&P 500 and buy an iShares S&P 500 and be fine because they're different funds. Even though their goal is to follow the same index, they are not the same exact fund.

[Rocky Mtn Man]

Your plan is fine with no potential wash.

Even more closely similar, you could sell VTI and buy SCHB. Both are total US large market. But they don't follow the exact index. Heck....you could likely sell a Vanguard S&P 500 and buy an iShares S&P 500 and be fine because they're different funds. Even though their goal is to follow the same index, they are not the same exact fund.

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

[lakpr]

Your plan is fine with no potential wash.

Even more closely similar, you could sell VTI and buy SCHB. Both are total US large market. But they don't follow the exact index. Heck....you could likely sell a Vanguard S&P 500 and buy an iShares S&P 500 and be fine because they're different funds. Even though their goal is to follow the same index, they are not the same exact fund.

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

Source?

[Rocky Mtn Man]

Your plan is fine with no potential wash.

Even more closely similar, you could sell VTI and buy SCHB. Both are total US large market. But they don't follow the exact index. Heck....you could likely sell a Vanguard S&P 500 and buy an iShares S&P 500 and be fine because they're different funds. Even though their goal is to follow the same index, they are not the same exact fund.

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

Source?

viewtopic.php?t=379748

[cchrissyy]

OP, nothing you propose would be a wash sale and even if it was, there are no warnings for that. like others have said, they are informing you re: a mutual fund trading policy, not anything about tax laws or advice.

[lakpr]

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

Source?

viewtopic.php?t=379748

Many posters in that thread said there was no definitive guidance from IRS, and even the court cases discussed were in the context of corporations and options. IRS hadn't definitely ruled that two S&P 500 funds from separate investment companies are indeed substantially identical.

[goingup]

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

Source?

viewtopic.php?t=379748

Many posters in that thread said there was no definitive guidance from IRS, and even the court cases discussed were in the context of corporations and options. IRS hadn't definitely ruled that two S&P 500 funds from separate investment companies are indeed substantially identical.

Only one poster in that thread remotely suggested that 2 SP500 funds might differ enough to clear the “substantially identical” standard.

If 2 SP500 index funds aren’t substantially identical I can’t fathom what is.

[retiredjg]

Consensus is much too strong a word. It implies a general agreement, something not too far from complete agreement among all parties. Such a thing is not going to happen here, or at least not often.

From what I've read here over the years, I think the majority opinion is that two S&P 500 index funds could cause a wash sale. Why bother to poke that bear - there are other options available.

[rkhusky]

Substantially identical is less identical than identical.

[lakpr]

If 2 SP500 index funds aren’t substantially identical I can’t fathom what is.

That still remains your opinion, not a fact. It is not Holy Water unless Blessed by the Pope.

[placeholder]

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

No one has any information that backs this up it's just a popular opinion and there is some reasonable counter argument based on past and present irs publications that supports them being not substantially identical.

[placeholder]

Only one poster in that thread remotely suggested that 2 SP500 funds might differ enough to clear the “substantially identical” standard.

Yeah but he's a nice guy.

If 2 SP500 index funds aren’t substantially identical I can’t fathom what is.

Vanguard mutual funds and corresponding etfs are very strongly likely because vanguard allows tax free conversion between them.

[alex_686]

The consensus on this forum is that is NOT true. Two S&P 500 funds from seperate investment companies ARE substantially identical.

Source?

viewtopic.php?t=379748

Many posters in that thread said there was no definitive guidance from IRS, and even the court cases discussed were in the context of corporations and options. IRS hadn't definitely ruled that two S&P 500 funds from separate investment companies are indeed substantially identical.

I will point out that there are not different definitions for individuals and corporations. Nor does the structure of the investment. i.e. funds, futures, options, etc.

[Namuh100]

Thank you, Everyone, for your replies, very helpful. Really appreciate everyone here!