For tax efficiency reasons I'd like to move a chunk of international equities from taxable to tax deferred, and it turns out I can capture a capital loss at the same time.
For the sake of this discussion, assume I have $100k of S&P 500 in tax-deferred at Fidelity, $100k of Vanguard Developed Markets Index in taxable at Vanguard and another $100k of VEA (ETF equivalent of Vanguard Developed Markets) in taxable at Schwab.
Until a few days I had both the Vanguard and Schwab accounts setup to auto reinvest dividends. I also had made a recent purchase of the Developed Markets fund:
3/12 - purchased a large chunk of the Developed Markets Index at Vanguard
3/15 - auto purchase of Developed Markets Index due to dividend
3/20 - auto purchase of VEA at Schwab due to dividend
My plan was to wait until 4/21, then sell $100k of the Vanguard Developed Markets Index and move the money into an S&P 500 fund in taxable. And the same day I would sell $100k of the S&P 500 within tax-deferred and move that money into FSPSX (Fidelity International Index Fund), which tracks a completely different index than Developed Markets/VEA. That would effectively move $100k of my international holdings form taxable to tax-deferred, and simultaneously move $100k of my S&P 500 from tax-deferred to taxable. This seems like a desirable move given that the S&P is more tax efficient, plus it would allow me to capture about $10k in capital losses.
Questions:
1. Is my plan sound and am I correctly avoiding a wash sale?
2. Looking at https://www.bogleheads.org/wiki/Tax_loss_harvesting , I see mention of concerns related to qualified dividends:
For the sake of this discussion, assume I have $100k of S&P 500 in tax-deferred at Fidelity, $100k of Vanguard Developed Markets Index in taxable at Vanguard and another $100k of VEA (ETF equivalent of Vanguard Developed Markets) in taxable at Schwab.
Until a few days I had both the Vanguard and Schwab accounts setup to auto reinvest dividends. I also had made a recent purchase of the Developed Markets fund:
3/12 - purchased a large chunk of the Developed Markets Index at Vanguard
3/15 - auto purchase of Developed Markets Index due to dividend
3/20 - auto purchase of VEA at Schwab due to dividend
My plan was to wait until 4/21, then sell $100k of the Vanguard Developed Markets Index and move the money into an S&P 500 fund in taxable. And the same day I would sell $100k of the S&P 500 within tax-deferred and move that money into FSPSX (Fidelity International Index Fund), which tracks a completely different index than Developed Markets/VEA. That would effectively move $100k of my international holdings form taxable to tax-deferred, and simultaneously move $100k of my S&P 500 from tax-deferred to taxable. This seems like a desirable move given that the S&P is more tax efficient, plus it would allow me to capture about $10k in capital losses.
Questions:
1. Is my plan sound and am I correctly avoiding a wash sale?
2. Looking at https://www.bogleheads.org/wiki/Tax_loss_harvesting , I see mention of concerns related to qualified dividends:
I guess I don't fully understand the implications of this. Do I need to hold till 5/21 to ensure that 3/15 and 3/20 dividends are qualified?If you hold shares for fewer than 61 days and receive qualified dividends from those shares, you cannot take them as qualified dividends, even though the fund company may state that they are qualified.
Statistics: Posted by cacophony — Mon Apr 22, 2024 2:46 am — Replies 0 — Views 73