Is it ok to hold the same fund in my taxable account as my Roth IRA?

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Jesteroftheswamp
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Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by Jesteroftheswamp »

Long story short, there’s an ETF I really like that I want to hold for the long term. I initially put this etf in my Roth IRA, however upon maxing that out, I obviously can no longer invest into this fund in my Roth.

Is it sensible to also invest in this fund in a taxable account, or is it unheard of to have the same fund in both accounts?

Thanks
livesoft
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by livesoft »

I do so, so I guess it must be OK.

For instance, I own VTI in my taxable account, my Roth IRA, my 401(k), and my spouse's traditional IRA. I do not have any traditional IRAs myself, otherwise I would probably have shares of VTI in it sometimes, too.

I guess I should also write that I understand wash sales when tax-loss harvesting as well as just about anyone.
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retiredjg
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by retiredjg »

It is ok to hold the same fund in taxable and your Roth IRA. But you do have to be aware of wash sales. I'd say that few people understand wash sales as well as livesoft though. :happy
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celia
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by celia »

Some people here have the same holdings in all their accounts. Their portfolio is easy to understand but it may not be tax-efficient.
jbinpa59
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by jbinpa59 »

retiredjg wrote: Sun Jul 03, 2022 5:29 pm It is ok to hold the same fund in taxable and your Roth IRA. But you do have to be aware of wash sales. I'd say that few people understand wash sales as well as livesoft though. :happy
Isn't the answer to avoiding unintended/unoticed in advance wash sales in the OP situation ;
to turn off auto reinvest of any fund held in taxable where ever you hold that fund ?

thats what I do and I believe that's the method of choice?
DW and I hold same fund in our seperate Taxable/Taxdef IRA/Roth IRA accounts

I always pay attention when livesoft or retiredjg posts :beer
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theac
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by theac »

retiredjg wrote: Sun Jul 03, 2022 5:29 pm It is ok to hold the same fund in taxable and your Roth IRA. But you do have to be aware of wash sales. I'd say that few people understand wash sales as well as livesoft though. :happy
I have a Total Stock fund holding in my ROTH and am running low on cash in the ROTH to buy more, so I also have been thinking I may one day buy VTI in my taxable account.

I'm glad someone brought this up because I hadn't thought of this, but as I remember if you sell at a loss and TLH in the taxable, you cannot buy anymore new shares for 30 days in either the ROTH or the taxable, and that includes having to cancel any dividend reinvestment in both accounts, correct?

So you have to temporarily take all your dividends in cash, correct?
"We keep you alive to serve this ship. Row well...and live." Ben Hur...and The Taxman! hahaha (a George Harrison song)
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retiredjg
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by retiredjg »

If you two are expecting an answer from me, I think the best way to avoid a wash sale is to not hold the same fund in taxable that you hold in other accounts. :happy

To me, that is the easiest and simplest solution and it allows an investor to TLH at a moment's notice without having to check anything, count anything, or change anything. I'm a very lazy investor.
livesoft
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by livesoft »

theac wrote: Sun Jul 03, 2022 6:59 pmI'm glad someone brought this up because I hadn't thought of this, but as I remember if you sell at a loss and TLH in the taxable, you cannot buy anymore new shares for 30 days in either the ROTH or the taxable, and that includes having to cancel any dividend reinvestment in both accounts, correct?

So you have to temporarily take all your dividends in cash, correct?
Well, you can always create a wash sale and report it as such. That's actually not hard despite what you might read on the internet. Quarterly dividends that are automatically reinvested usually do not result buying massive number of shares, so losing out on a tiny amount of tax benefits from tax-loss harvesting can be "no big deal."
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theac
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by theac »

retiredjg wrote: Sun Jul 03, 2022 7:13 pm If you two are expecting an answer from me, I think the best way to avoid a wash sale is to not hold the same fund in taxable that you hold in other accounts. :happy

To me, that is the easiest and simplest solution and it allows an investor to TLH at a moment's notice without having to check anything, count anything, or change anything. I'm a very lazy investor.
Thanks, I like that idea because I have such a small holding in the ROTH that if I do buy in the taxable, I'll just sell what's in the ROTH. I like to keep things simple when possible, and that sounds like an easy way to do it.
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Statistical
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by Statistical »

theac wrote: Sun Jul 03, 2022 6:59 pm
retiredjg wrote: Sun Jul 03, 2022 5:29 pm It is ok to hold the same fund in taxable and your Roth IRA. But you do have to be aware of wash sales. I'd say that few people understand wash sales as well as livesoft though. :happy
I have a Total Stock fund holding in my ROTH and am running low on cash in the ROTH to buy more, so I also have been thinking I may one day buy VTI in my taxable account.

I'm glad someone brought this up because I hadn't thought of this, but as I remember if you sell at a loss and TLH in the taxable, you cannot buy anymore new shares for 30 days in either the ROTH or the taxable, and that includes having to cancel any dividend reinvestment in both accounts, correct?

So you have to temporarily take all your dividends in cash, correct?
Not just 30 days after but also 30 days before. So 61 days total.

While not required it is massively easier to just own similar but unrelated assets in taxable.

Examples:
rotate between SCHB and ITOT in taxable and hold VTSAX in tax sheltered.
OR
rotate between VTI and ITOT in taxable and hold FSKAX/FZROX in tax sheltered.

If what you hold in taxable isn't the same as tax sheltered AND you turn off dividend reinvestment in taxable AND you ensure you don't manually buy 30 days before or after a sale in taxable then it is impossible to create a wash sale.
Last edited by Statistical on Sun Jul 03, 2022 9:26 pm, edited 2 times in total.
dan7800
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by dan7800 »

retiredjg wrote: Sun Jul 03, 2022 7:13 pm If you two are expecting an answer from me, I think the best way to avoid a wash sale is to not hold the same fund in taxable that you hold in other accounts. :happy

To me, that is the easiest and simplest solution and it allows an investor to TLH at a moment's notice without having to check anything, count anything, or change anything. I'm a very lazy investor.
In my 401k I hold FSKAX (equivalent to VTSAX). I told ITOT in my ROTH and VTI in taxable. This is a good way to avoid wash sales and I just leave div reinvesting on in my 401k and ROTH.
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theac
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by theac »

Statistical wrote: Sun Jul 03, 2022 9:21 pm
theac wrote: Sun Jul 03, 2022 6:59 pm
retiredjg wrote: Sun Jul 03, 2022 5:29 pm It is ok to hold the same fund in taxable and your Roth IRA. But you do have to be aware of wash sales. I'd say that few people understand wash sales as well as livesoft though. :happy
I have a Total Stock fund holding in my ROTH and am running low on cash in the ROTH to buy more, so I also have been thinking I may one day buy VTI in my taxable account.

I'm glad someone brought this up because I hadn't thought of this, but as I remember if you sell at a loss and TLH in the taxable, you cannot buy anymore new shares for 30 days in either the ROTH or the taxable, and that includes having to cancel any dividend reinvestment in both accounts, correct?

So you have to temporarily take all your dividends in cash, correct?
Not just 30 days after but also 30 days before. So 61 days total.

While not required it is massively easier to just own similar but unrelated assets in taxable.

Examples:
rotate between SCHB and ITOT in taxable and hold VTSAX in tax sheltered.
OR
rotate between VTI and ITOT in taxable and hold FSKAX/FZROX in tax sheltered.

If what you hold in taxable isn't the same as tax sheltered AND you turn off dividend reinvestment in taxable AND you ensure you don't manually buy 30 days before or after a sale in taxable then it is impossible to create a wash sale.
Oh yeah, I had forgotten about that little detail.
Just one more reason to simplify things, in order to to avoid that pitfall.
"We keep you alive to serve this ship. Row well...and live." Ben Hur...and The Taxman! hahaha (a George Harrison song)
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retired@50
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by retired@50 »

Jesteroftheswamp wrote: Sun Jul 03, 2022 4:57 pm Long story short, there’s an ETF I really like that I want to hold for the long term. I initially put this etf in my Roth IRA, however upon maxing that out, I obviously can no longer invest into this fund in my Roth.

Is it sensible to also invest in this fund in a taxable account, or is it unheard of to have the same fund in both accounts?

Thanks
I think the answer depends on the ETF that you really like...

Is it tax efficient?
Is it actively managed?
Are you willing to share the name of the fund?

I once held an actively managed mutual fund in my taxable account, and each December I got a sizable lump of capital gains distributions that I didn't really need, which forced me to pay taxes I would have rather not paid. I eventually sold off this position to create a more tax efficient portfolio.
More details on tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Also, as you can see, the discussion in this thread has turned on whether or not you use the tax loss harvesting strategy, and if you do, how well do you actually understand that process so you can avoid inadvertent wash sales.

Just in case you're interested...
Details on tax loss harvesting: https://www.bogleheads.org/wiki/Tax_loss_harvesting
Details on wash sales: https://www.bogleheads.org/wiki/Wash_sale

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
h82goslw
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by h82goslw »

If one never TLH then there’s no need for concern about having the same fund across multiple accounts correct?
(The vast majority of my money is in qualified accounts. Very small taxable)
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retired@50
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by retired@50 »

h82goslw wrote: Mon Jul 04, 2022 9:56 am If one never TLH then there’s no need for concern about having the same fund across multiple accounts correct?
(The vast majority of my money is in qualified accounts. Very small taxable)
True, if you never TLH, then you don't need to worry.

The minimum condition that must be met for TLH and/or a wash sale, is that you'd have to sell something for a loss in your taxable account. If you never do this, then you'll never have to worry about how to report capital losses on your tax return, or possibly, how to deal with a wash sale.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
pkcrafter
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by pkcrafter »

retired@50 wrote: Mon Jul 04, 2022 9:49 am
Jesteroftheswamp wrote: Sun Jul 03, 2022 4:57 pm Long story short, there’s an ETF I really like that I want to hold for the long term. I initially put this etf in my Roth IRA, however upon maxing that out, I obviously can no longer invest into this fund in my Roth.

Is it sensible to also invest in this fund in a taxable account, or is it unheard of to have the same fund in both accounts?

Thanks
I think the answer depends on the ETF that you really like...

Is it tax efficient?
Is it actively managed?
Are you willing to share the name of the fund?
I agree with the above--it would be helpful if you provided the name/ticker of the ETF you are interested in.

Paul
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HMSVictory
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by HMSVictory »

I held VTI in both my taxable brokerage account and my Roth IRA. Its a perfect investment for those accounts.

Only hang up is if you are tax loss harvesting in the brokerage account make sure you are not auto investing into the Roth at the same time (30 day time frame). An easy work around for this is to hold VOO in taxable. Performance wise you are not looking at a big difference between VTI and VOO due to the capitalization weighting of the indexs and how they are constructed.

Rob Berger does a nice job detailing the differences in VOO and VTI in this video. I'm very comfortable with either holding as the core of my portfolio.

https://www.youtube.com/watch?v=4DZtkENquYw
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livesoft
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Re: Is it ok to hold the same fund in my taxable account as my Roth IRA?

Post by livesoft »

It may sound too simple, but if one buys VTI at what turns out to be its lowest price over the next 10 years, then one will not have any tax-loss harvesting opportunities to sell VTI at a loss. This was certainly the case for many mutual funds and ETFs in March 2009. Also VTI is still quite a bit up (50% to 60% at least) from its March 2020 price. So if you think you are buying at fire sale prices, then I would not worry about all this wash sale side discussion.
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