KMACParticipantStatus: DentistPosts: 14Joined: 12/26/2017
So in most of the WCI articles it recommends rebalancing within a tax protected account so that there are no capital gains or tax consequences.
So am I correct to assume that any buying and selling in a Roth IRA, a 401(k) or HSA will not have any tax consequences in the year the rebalancing was done or in retirement when the money is withdrawn??
Thanks in advance!!July 22, 2019 at 4:13 am MST #232496PedsModeratorStatus: PhysicianPosts: 4410Joined: 01/08/2016
Unless it’s a wash sale.KMACParticipantStatus: DentistPosts: 14Joined: 12/26/2017
And a wash sale is when I’m tax loss harvesting and inadvertently buy the exact same stock refund 30 days before or after I sell that exact same stock or fun correct?
So as long as I don’t accidentally trigger a wash sale there should be no tax consequences to rebalancing in a tax protected account?July 22, 2019 at 4:47 am MST #232499ENT DocParticipantStatus: PhysicianPosts: 3502Joined: 01/14/2017So as long as I don’t accidentally trigger a wash sale there should be no tax consequences to rebalancing in a tax protected account?Click to expand…
Correct. If you are TLHing in taxable this may be an issue if timed inappropriately. However, dividend reinvestment in those tax-protected accounts is included in “purchases” in that 61 day window (30 before and 30 after the date of sale). So you don’t even have to rebalance to induce a wash sale.
In regards to tax-protected accounts, the basis is either zero (401k, TIRA) or adjusts to the net proceeds at time of sale (Roth), so you’d never get a wash sale problem within a tax-protected account. It’s only in a taxable account where your basis is changing and can be affected.