Preparing for Tax Loss Harvesting

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Topic Author
Cram
Posts: 19
Joined: Sat Apr 27, 2019 9:47 pm

Preparing for Tax Loss Harvesting

Post by Cram »

Hello,

I'm a long time reader, but haven't had a question in a long time since setting up our investment plan back in 2017 (Thanks again). However, with current market conditions, TLH seems to be the flavor of the day and I would like to take a shot at it if possible. This is my first time looking into it and I want to make sure that I understand the rules properly before inadvertently triggering a wash sale.

Since January 2022, we have incurred a roughly $10k loss from our VTIAX fund located in our brokerage account. I would like to book the loss and exchange the fund for VFWAX. Yesterday, I stopped automatic reinvestment of dividends and confirmed that the last dividend were reinvested in March 2022 for both the Roth account and brokerage account. I currently hold VTIAX in my Roth account (funded in January 2022), but have not contributed to VTIAX since the dividends were reinvested in March 2022.

1. Can I still proceed with TLH and exchange VTIAX for VFWAX in our brokerage account even though I own VTIAX in my Roth account?

For clarity, please see below our current investment portfolio:

His 403B: VIIIX, VIEIX and VBTLX
Her 401K: FXAIX and FSMAX

His Roth IRA: VTIAX, VGSLX (Funded in January 2022 with last dividend reinvested on 3/18/22)
Her Roth IRA: SCHH, SCHA, SWTSX

His and Hers HSA: VTSAX

Joint Brokerage Account: VTSAX and VTIAX (VTIAX last bought in February 2022 with last dividend reinvested on 3/18/22)

Thank you for sharing your wisdom and helping me further my financial literacy.
student
Posts: 10764
Joined: Fri Apr 03, 2015 6:58 am

Re: Preparing for Tax Loss Harvesting

Post by student »

Yes. You can since your last purchase across all account is from March.

Edit: Don't buy it back within the next 30 days after you harvested...
rkhusky
Posts: 17764
Joined: Thu Aug 18, 2011 8:09 pm

Re: Preparing for Tax Loss Harvesting

Post by rkhusky »

There is another dividend coming in June, so don't turn dividend reinvestment back on until that has passed.

Are you selling all your VTIAX? If so, you may just want to stay in VFWAX, since it is best to have different funds in taxable compared to tax-advantaged to help avoid wash sale problems. (in that regard, you may want to move your HSA into something other than VTSAX - perhaps VFIAX or VLCAX).
Topic Author
Cram
Posts: 19
Joined: Sat Apr 27, 2019 9:47 pm

Re: Preparing for Tax Loss Harvesting

Post by Cram »

Thanks for clarifying. Turns out all VTIAX lots purchased had a loss, so I exchanged the entire fund for VFWAX. Thanks for pointing out the potential issue with holding VTSAX in my HSA for future TLH purposes. I will find alternative funds for our HSA.

Can I purchase additional shares of VFWAX immediately without any issues? We are still far off our desired AA for international and want to keep building the fund up.
rkhusky
Posts: 17764
Joined: Thu Aug 18, 2011 8:09 pm

Re: Preparing for Tax Loss Harvesting

Post by rkhusky »

Cram wrote: Wed May 18, 2022 10:46 am Can I purchase additional shares of VFWAX immediately without any issues? We are still far off our desired AA for international and want to keep building the fund up.
Yes.
Topic Author
Cram
Posts: 19
Joined: Sat Apr 27, 2019 9:47 pm

Re: Preparing for Tax Loss Harvesting

Post by Cram »

Hi All,

Given recent markets conditions, I have a follow up question. We've continued to incur significant loss in VFWAX (Last dividend reinvested on 6/17/22) since harvesting and I would like to harvest that and convert back to VTIAX. Do you see any potential issue with selling and buying back VTIAX to book that loss as well? As a reminder we have VTIAX in my Roth IRA with last dividend reinvested on 6/17/22. As always, thank you for your help!
nolesrule
Posts: 2631
Joined: Thu Feb 26, 2015 9:59 am

Re: Preparing for Tax Loss Harvesting

Post by nolesrule »

Cram wrote: Fri Sep 02, 2022 11:06 am Hi All,

Given recent markets conditions, I have a follow up question. We've continued to incur significant loss in VFWAX (Last dividend reinvested on 6/17/22) since harvesting and I would like to harvest that and convert back to VTIAX. Do you see any potential issue with selling and buying back VTIAX to book that loss as well? As a reminder we have VTIAX in my Roth IRA with last dividend reinvested on 6/17/22. As always, thank you for your help!
A wash would only happen if you were holding VFWAX shares (or another share class / ETF of that fund) somewhere, because that's what you'd be selling for a loss.
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