Can you have VTIAX in both taxable and Roth IRA?

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bend_and_bloom
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Can you have VTIAX in both taxable and Roth IRA?

Post by bend_and_bloom »

Hello,

I have VTIAX (Vanguard International Index Fund Admiral) in my Roth IRA. I need to add an international fund to my taxable but I'm not sure if I should add VTIAX or a different fund. I do not plan to ever sell these funds but I'm still on the fence because of the possibility of a wash sale. Any thoughts? Do any of you have VTIAX in both a taxable account and Roth IRA?

Thank you!
homebuyer6426
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by homebuyer6426 »

I have VTI in both types of accounts. It's no problem for buy and hold investing.
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Hyperchicken
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Hyperchicken »

If you want to tax loss harvest in the future (should opportunity arise), then e.g. automatic dividend reinvestment in IRA may cause a wash sale. Whether this is a concern that you want to plan around is up to you.
tonyclifton
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by tonyclifton »

Yes, you can own VTIAX in both your taxable and Roth IRA. You may wish to use VXUS which is the ETF version in your taxable account - it has a slightly lower expense ratio and is essential the same fund.

Please check into the wiki for tax loss harvesting as you may not wish to hold VXUS or VTIAX in your taxable account but something similar so that you could do tax loss harvesting if/when the opportunity presents itself. The wiki suggests IXUS.
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

Yes, while we do not own VTIAX shares anymore, we did have them in the past in a few accounts including taxable and spouse's IRA. I used this fund to create every possible kind of wash sale that I could and to document that wash sales were nothing to be feared and did not cost me more than about half a dollar in tax savings. Although if I had not created the wash sale, then I would have lost about 3% of my money because VTIAX dropped more after I sold it.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

You could use different funds in taxable/tax preferred. I do that for S&P 500/TSM funds. Otherwise I keep one fund in either taxable or tax preferred. That works out since I have all the fixed income funds in my tax deferred and other tax inefficient funds, but higher expected rate of return, in my Roth.

Using a different share class of the same fund may not pass muster with the IRS as being substantial different. Maybe not an issue unless you are audited.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 12:35 pm Yes, while we do not own VTIAX shares anymore, we did have them in the past in a few accounts including taxable and spouse's IRA. I used this fund to create every possible kind of wash sale that I could and to document that wash sales were nothing to be feared and did not cost me more than about half a dollar in tax savings. Although if I had not created the wash sale, then I would have lost about 3% of my money because VTIAX dropped more after I sold it.
May I ask the $ amount of your transaction such that the wash sale < $0.50 in TLH?
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

Leif wrote: Wed Sep 22, 2021 12:54 pmMay I ask the $ amount of your transaction such that the wash sale < $0.50 in TLH?
Please review this thread: viewtopic.php?t=179414

BTW, "< $0.50 in TLH" is NOT the same as less than half a dollar in tax savings. Please do not confuse realized losses with tax-savings on those realized losses.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 1:00 pm
Leif wrote: Wed Sep 22, 2021 12:54 pmMay I ask the $ amount of your transaction such that the wash sale < $0.50 in TLH?
Please review this thread: viewtopic.php?t=179414

BTW, "< $0.50 in TLH" is NOT the same as less than half a dollar in tax savings. Please do not confuse realized losses with tax-savings on those realized losses.
I understand the difference.

I had some problems with some of your links. Images from tinypic are no longer displayed.

This summary from one of your more recent linked threads I found useful.
The Bottom Line
Okay, so what have we learned about tax loss harvesting today? Let's list it out:

# 1 You should do it if you are given the chance. It will save you money.

# 2 Beware the wash-sale rules. You can't buy back what you just sold in any investing account (including your spouse's) for 30 days. No, you can't buy more shares just before you sell them either. That 30 days goes both forward and backward.


This nine year old might not be able to grow a real beard, but he could definitely figure out tax loss harvesting.

# 3 Don't sweat the substantially identical rules. As long as you're buying a different fund (not a different share class of the same fund) the IRS isn't going to hassle you about it. So buy a fund that is very highly correlated to the original one.
Or, just leave your sale in cash for 30 days. Bogleheads will call you are market timer, even if you hold to the exact 30 days. Anyway, it is your money your choice.
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

# 2 Beware the wash-sale rules. You can't buy back what you just sold in any investing account (including your spouse's) for 30 days. No, you can't buy more shares just before you sell them either. That 30 days goes both forward and backward.
Where did this come from? It is not strictly true as you have written it and is false. So maybe context is missing?
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 2:16 pm
# 2 Beware the wash-sale rules. You can't buy back what you just sold in any investing account (including your spouse's) for 30 days. No, you can't buy more shares just before you sell them either. That 30 days goes both forward and backward.
Where did this come from? It is not strictly true as you have written it and is false. So maybe context is missing?
Near the end of the White Coat Investor article. The last link in the first post for your thread "Real-life, real-time wash sale & TLH documented"
Update for 2020: The Whitecoat Investor blog in 2018 has posted screen captures from a Vanguard account in a very nice write-up on TLH, too:
https://www.whitecoatinvestor.com/tax-l ... -vanguard/
BTW, I did not write it. I just copied it from the White Coat Investor article you linked to.
Last edited by Leif on Wed Sep 22, 2021 2:48 pm, edited 1 time in total.
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

OK, context is everything.

One can buy back anytime one wants to. There is no prohibition. If one sold for a gain previously and bought back higher or lower, then no wash sale possible. And mostly a temporarily disallowed loss from a wash sale* is not a big deal since the loss is only temporarily disallowed. Thus, the 30-days before / after sentence needs context as well. Oh, well.

*wash sale = a true bona fide wash sale and not some non-wash sale. Just because one bought-and-sold or sold-and-bought within 30 days or 30 femtoseconds does not create a wash sale -- there are additional requirements.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 2:47 pm *wash sale = a true bona fide wash sale and not some non-wash sale. Just because one bought-and-sold or sold-and-bought within 30 days or 30 femtoseconds does not create a wash sale -- there are additional requirements.
What are the additional requirements? Do you mean the substantial identical requirement?
Investopedia wrote: Under Section 1091 of the treasury regulations, a wash sale occurs when an investor sells a stock (or other securities) at a loss, and within 30 days before or after the sale:

Buys substantially identical stock or securities,
Acquires substantially identical stock or securities in a fully taxable trade,
Enters into a contract or option to buy substantially identical stock or securities, or
Acquires substantially identical stock for an individual retirement account (IRA) or Roth IRA.
I don't understand your points here. I guess it is easier for me to just avoid overlapping funds between taxable and retirement accounts. In taxable I do not use reinvest, so should be no wash sale issues.
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

One important point is made by the 3 words "at a loss"

Another important point is if shares are sold at a loss, what happens to the disallowed loss. The true Zen of Wash Sales is all about what happens to the disallowed loss. If one doesn't know what happens to the disallowed loss, then they will not know all they can know about wash sales.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 4:02 pm One important point is made by the 3 words "at a loss"

Another important point is if shares are sold at a loss, what happens to the disallowed loss. The true Zen of Wash Sales is all about what happens to the disallowed loss. If one doesn't know what happens to the disallowed loss, then they will not know all they can know about wash sales.
Good point. I looked it up.
You’ll need to figure the basis for shares sold in a wash sale. When you do, add the amount of disallowed loss to the basis of the shares that caused the wash sale. These are the new shares you received. By doing this, you defer the loss, but it’s not disallowed for good. You’ll get the benefit of the loss when you eventually sell the new shares (unless it’s another wash sale!).
H&R Block - What is a Wash Sale?
livesoft
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by livesoft »

Leif wrote: Wed Sep 22, 2021 4:28 pm\Good point. I looked it up.
You’ll need to figure the basis for shares sold in a wash sale. When you do, add the amount of disallowed loss to the basis of the shares that caused the wash sale. These are the new shares you received. By doing this, you defer the loss, but it’s not disallowed for good. You’ll get the benefit of the loss when you eventually sell the new shares (unless it’s another wash sale!).
H&R Block - What is a Wash Sale?
And so what happens to the disallowed loss if the shares that were bought to create a wash sale from selling shares in a taxable account at a loss were bought inside an IRA?
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tomsense76
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by tomsense76 »

Yes you can. Currently I do (for reasons). It's not ideal because of the TLH (tax-loss harvest) situation as others have noted, but that is easy to remedy. Namely when you TLH in taxable just exchange funds in the IRA to match the same end holding. So VXUS (or VTIAX) can be exchanged for IXUS in both at the same time. Make sure when exchanging that in the IRA dividends are still reinvested.
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Leif
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Re: Can you have VTIAX in both taxable and Roth IRA?

Post by Leif »

livesoft wrote: Wed Sep 22, 2021 4:36 pm And so what happens to the disallowed loss if the shares that were bought to create a wash sale from selling shares in a taxable account at a loss were bought inside an IRA?
Don't know and don't care because...
Leif wrote:...I use different funds in taxable/tax preferred. And I do not reinvest in taxable.
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