Author Topic: Can I have the same funds in both a taxable account and a Roth IRA?  (Read 313 times)

coolhand2

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Hey all,

I am really taken by the idea of index fund investing, but I'm a little unsure how I should be differentiating my funds between a Roth IRA account and a taxable brokerage account. I currently have both in Vanguard, and both have the same fund -- the Vanguard Total Stock Market Index Fund (VTSAX). I also want to add the Total International Stock Index Fund (VTIAX) to get a bit more broadly diverse, in line with the simple "three fund portfolio" (total domestic stock index, total international stock index, and total bond market index fund). However, since I'm still in my early 20's, I'm trying to stay away from bonds and just stick to the two stock index funds for now.

In short, is it redundant to have the same funds in different accounts? For simplicity's sake and ease of mind, I really like the idea of my portfolio just consisting of those two total market index funds growing over time, but I don't know if it's smart to have identical funds in both a taxable account and in a Roth IRA.

Any insight would be greatly appreciated! Thanks all!

NotJen

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Re: Can I have the same funds in both a taxable account and a Roth IRA?
« Reply #1 on: December 02, 2020, 08:01:49 AM »
It's fine to have the same funds in your Roth IRA and your taxable account.  Sometimes it's necessary to get your target asset allocation - for example, I have VTSAX in my Roth IRA, Rollover IRA, and taxable because it needs to be 63% of my portfolio, and that's the only way I can get that number right now.

When you do add bonds, you'll want to keep them out of your taxable account.  I used the Bogleheads wiki to learn about tax efficient fund placement: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement


secondcor521

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Re: Can I have the same funds in both a taxable account and a Roth IRA?
« Reply #2 on: December 02, 2020, 08:25:15 AM »
What NotJen said.

Although there is some ambiguity, most people think that the wash sale rule applies across taxable and IRA accounts.  It's probably not something you need to worry about too much if you're just buying, but if you do happen to sell something in a taxable account at a loss and buy that same (or substantially identical) mutual fund in your Roth IRA, then you may not be able to deduct all of the loss on your tax return.  Google "wash sale rule" and read up on it.