Originally Posted by Rothman
what I was thinking looking at my own portfolio in my taxable account I have lots of capital gains to realize once I retire and start drawing down the taxable account first. If I look at Vanguard Total Stock Market VTI it was at 34 with the 2009 low and is now 107. Maybe your picks are "lucky" enough to have tax-loss offsets but my last 5 years just haven't provided the opportunity to offset these gains.
We have lots of unrealized capital gains from positions purchased in March and April 2009 in our taxable accounts. They were purchased with money realized from selling other positions at a loss in tax-loss harvesting moves. Yes, there have been only smallish opportunities to tax-loss harvest since April 2009, but I can assure you that we take every such opportunity that presents itself.
That written, our carryover losses date from 2009 and earlier. As we draw down our taxable accounts, we do offset realized gains, so no taxes. We are not withdrawing a large percentage of taxable assets every year, so by the time our losses are used up offsetting gains, we should be in the 15% marginal income tax bracket where LTCG are taxed at 0%.
So to summarize: carryover losses offset cap gains while we are in a higher tax bracket, then when in lower brackets, gains are tax-free. Ain't that nice?
And in the meantime, Roth conversions are happening. I have traditional 401(k) and a Roth 401(k), so I can convert within those plans pretty easily as my tax situation allows.
So to get back to the thread topic: Tax efficiency is complicated by the future. Most of the "studies" that I have read do not cover the situations that I find myself in, so there are no "rules of thumb". It is helpful to understand the tax rules and how different kinds of accounts and income are taxed and come up with one's own plan.