Author Topic: Betterment - Tax Loss Harvesting  (Read 1371 times)

aalferez

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Betterment - Tax Loss Harvesting
« on: June 19, 2017, 02:15:38 PM »
I guess my issue is a lack of knowledge about what exactly Betterment does to achieve this.
My company has a 401K which I max out. This is done in Vanguard.
Apart from that I contribute to my Roth IRA 5,5K every year.
I have my Roth IRA in Betterment. (90 stock 10 bond)
I also have an individual taxable account in Betterment.
So far so good.
Now, when I try to set the Tax Loss Harvesting, it is asking me if I have overlapping securities outside Betterment.
Does it mean that since Betterment invests in Vanguard and my 401K is in Vanguard too, I have overlapping securities and I cannot set up the Tax Loss Harvesting?
What can happen if I ignore it and I activate the Tax Loss Harvesting?

I'm pretty new on this, any reading recommendations are welcome too.
My 401K has 20K and my Roth IRA 17,5K and my taxable investment account 4K

VoteCthulu

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Re: Betterment - Tax Loss Harvesting
« Reply #1 on: June 19, 2017, 02:27:47 PM »
It is impossible to tax loss harvest with any type of ira, 401k, etc. You can only harvest tax losses from a taxable investment account.

dandarc

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Re: Betterment - Tax Loss Harvesting
« Reply #2 on: June 19, 2017, 02:38:37 PM »
When tax loss harvesting, the key thing to avoid is a 'wash sale'.  If you sell at a loss and buy "substantially identical" securities within a certain time frame, you have a wash sale.  And even if your "buy" is in your IRA or 401K, you can trigger a wash sale.  You could trigger a wash sale simply by re-investing dividends.  So for Betterment to do automated tax-loss harvesting in your taxable account without triggering wash-sales, Betterment must know all of the securities that you own, which is why they are asking.

aalferez

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Re: Betterment - Tax Loss Harvesting
« Reply #3 on: June 19, 2017, 02:47:54 PM »
So since everything I have invested is in Vanguard and all my investments are not in Betterment, I cannot activate this.
Thank you

dandarc

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Re: Betterment - Tax Loss Harvesting
« Reply #4 on: June 19, 2017, 02:52:25 PM »
So since everything I have invested is in Vanguard and all my investments are not in Betterment, I cannot activate this.
Thank you
Nobody said that you cannot activate it.  You just need to tell them what you have and are buying elsewhere so you don't run into problems.