Author Topic: Selling Shares of Taxable Account to Max out Roth IRA?  (Read 3039 times)

MMMarbleheader

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Selling Shares of Taxable Account to Max out Roth IRA?
« on: April 06, 2016, 12:28:41 PM »
Question:

For 2015 I did not contribute to my Roth IRA or my spouses' (she is a SAHM so I can contribute to a spousal Roth). We have a taxable account from a windfall a few year back.

Before we found Boggleheads and MMM, we had it in managed mutual finds.  Luckily the market was strong so we made $$ but sold it and put it in a low fee Vanguard account. Currently we will actually be taking a loss if we sell shares.

Basically my question is if I should sell shares in the taxable account to max out the Roth contributions for my wife and I in 2015?

Thanks,

FIPurpose

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Re: Selling Shares of Taxable Account to Max out Roth IRA?
« Reply #1 on: April 06, 2016, 12:34:49 PM »
If it's a loss the only thing that I would avoid is buying the exact same fund to avoid wash sale so that you can take the loss next year as a tax write-off. I did this recently to harvest some loss. Sold VTSAX in my taxable and bought VFIAX in my IRA.

forummm

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Re: Selling Shares of Taxable Account to Max out Roth IRA?
« Reply #2 on: April 06, 2016, 12:39:45 PM »
I would definitely do this. It's a win/win. You get to deduct the loss next year and you get the contributions this year. In addition to making sure you don't buy the same fund that you're selling (at least for 30 days after the sale) make sure you haven't bought more of that fund in another account (even another retirement account)--including through dividend reinvestment in the past 30 days. That would be a wash sale. It's 30 days before and after the sale that results in a loss.

After 30 days you can switch what's in your IRA for the original fund again if you prefer.

MMMarbleheader

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Re: Selling Shares of Taxable Account to Max out Roth IRA?
« Reply #3 on: April 06, 2016, 12:54:27 PM »
I would definitely do this. It's a win/win. You get to deduct the loss next year and you get the contributions this year. In addition to making sure you don't buy the same fund that you're selling (at least for 30 days after the sale) make sure you haven't bought more of that fund in another account (even another retirement account)--including through dividend reinvestment in the past 30 days. That would be a wash sale. It's 30 days before and after the sale that results in a loss.

After 30 days you can switch what's in your IRA for the original fund again if you prefer.

Thanks for the heads up on the Wash Rule. Both funds are actually VASGX but I want to increase my stock allocation anyways. I know this is backwards because I should have my stocks in my brokerage account but I can wait 30 days to re balance.

NoStacheOhio

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Re: Selling Shares of Taxable Account to Max out Roth IRA?
« Reply #4 on: April 06, 2016, 01:24:42 PM »
I would definitely do this. It's a win/win. You get to deduct the loss next year and you get the contributions this year. In addition to making sure you don't buy the same fund that you're selling (at least for 30 days after the sale) make sure you haven't bought more of that fund in another account (even another retirement account)--including through dividend reinvestment in the past 30 days. That would be a wash sale. It's 30 days before and after the sale that results in a loss.

After 30 days you can switch what's in your IRA for the original fund again if you prefer.

Thanks for the heads up on the Wash Rule. Both funds are actually VASGX but I want to increase my stock allocation anyways. I know this is backwards because I should have my stocks in my brokerage account but I can wait 30 days to re balance.

Great way to harvest losses.

Nothing wrong with keeping stocks in an IRA. I think it was White Coat Investor that had a post showing that in some circumstances, bonds in taxable and stocks in deferred was a better way to go. Anybody have that link?

Depending on how much money, you could max 2015 and 2016 for you and your wife in one fell swoop.

johnny847

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Re: Selling Shares of Taxable Account to Max out Roth IRA?
« Reply #5 on: April 06, 2016, 03:21:50 PM »
I would definitely do this. It's a win/win. You get to deduct the loss next year and you get the contributions this year. In addition to making sure you don't buy the same fund that you're selling (at least for 30 days after the sale) make sure you haven't bought more of that fund in another account (even another retirement account)--including through dividend reinvestment in the past 30 days. That would be a wash sale. It's 30 days before and after the sale that results in a loss.

After 30 days you can switch what's in your IRA for the original fund again if you prefer.

Thanks for the heads up on the Wash Rule. Both funds are actually VASGX but I want to increase my stock allocation anyways. I know this is backwards because I should have my stocks in my brokerage account but I can wait 30 days to re balance.

Great way to harvest losses.

Nothing wrong with keeping stocks in an IRA. I think it was White Coat Investor that had a post showing that in some circumstances, bonds in taxable and stocks in deferred was a better way to go. Anybody have that link?

Depending on how much money, you could max 2015 and 2016 for you and your wife in one fell swoop.
http://whitecoatinvestor.com/asset-location-bonds-go-in-taxable/