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Old 01-15-2016, 12:08 PM   #881
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Yes but my fun is crimped because my favorite trading stock, Gilead is down hard at the beginning of the year and I cannot buy it because of wash sale rules. I traded it up for a profit in 2015 but had a slight loss in the last trade on December 21. I need that loss to stay in 2015 for ACA reasons so if I buy Gilead now it will wash out that loss and move it to 2016.

Stupid wash sale stuff. I hate hate it. I could make a ton o money in Gilead right now.
That's why I'm using these down days to sell out of my after tax trading account and re-buy into my Roth. Then I don't have to worry about tax rules. I just bought a bunch of BRK.B in my Roth. Now I'm selling the BRK.B in my after tax account and not have to worry about that anymore. Also by selling on a down day I lessen the overall cap gains on the stock. I've already moved GILD into the Roth. Might be a good time to buy more.
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Old 01-15-2016, 12:26 PM   #882
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That's why I'm using these down days to sell out of my after tax trading account and re-buy into my Roth. Then I don't have to worry about tax rules. I just bought a bunch of BRK.B in my Roth. Now I'm selling the BRK.B in my after tax account and not have to worry about that anymore. Also by selling on a down day I lessen the overall cap gains on the stock. I've already moved GILD into the Roth. Might be a good time to buy more.

This still falls under wash sale rules, assuming you sold BRK.B at a loss.

You might have a gain, so this might not affect you, but the way your post is worded it sounds like this might be a way to avoid a wash sale and it's not. I wouldn't want somebody to read this and then get themselves in trouble...
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Old 01-15-2016, 12:40 PM   #883
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+1

I used to think what Harley did was kosher, but have also read a ruling from the IRS that it violates the wash sales rule.
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Old 01-15-2016, 01:04 PM   #884
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This still falls under wash sale rules, assuming you sold BRK.B at a loss.

You might have a gain, so this might not affect you, but the way your post is worded it sounds like this might be a way to avoid a wash sale and it's not. I wouldn't want somebody to read this and then get themselves in trouble...
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+1

I used to think what Harley did was kosher, but have also read a ruling from the IRS that it violates the wash sales rule.
Well, I did have a gain this time, so it's good. But I didn't realize the wash sale rule mattered inside a Roth where there's no claiming gains or losses. Just out of curiosity (and laziness), what's the penalty for breaking the wash sale rule inside a Roth?


Edit: Never mind, looked it up myself. I see that you mean selling at a loss in a taxable account, then rebuying inside the Roth would negate the loss. Once you're inside the Roth for both the sale and the purchase the wash sale shouldn't apply.
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Old 01-15-2016, 01:38 PM   #885
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Edit: Never mind, looked it up myself. I see that you mean selling at a loss in a taxable account, then rebuying inside the Roth would negate the loss. Once you're inside the Roth for both the sale and the purchase the wash sale shouldn't apply.

Yep, within the Roth buy/sells don't matter since there's nothing you can deduct from taxes.

If you sell from a taxable account, buy in your Roth and had a loss, the loss would change the cost basis of the shares you bought in your Roth. At that point, the loss is useless since you'll never be able to claim it on your taxes. At least that's my understanding.
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Old 01-15-2016, 03:23 PM   #886
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Whew! What a relief! My recent purchases only closed very slightly lower than the purchase prices of a couple days ago.

I was so encouraged by that outcome that I decided to buy a huge slug of VEA. I got the money by a double trade:
Sell BND in tax-advantaged and buy VSS.
Sell VSS (at a gain) in taxable and buy VEA.
Since VSS is not as tax-efficent as VEA, this is an improvement in the tax-efficiency of my taxable account.

But now I am heavily overweighted in equities with all the buying in the last week. I will have to start selling next week on any upticks. Once again, if things go south, then I am screwed. So far though, it appears that if I had done nothing I would have about the same total portfolio value. That is, doing nothing lost money and buying more lost about the same amount of money.
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Old 01-15-2016, 03:25 PM   #887
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Yep, within the Roth buy/sells don't matter since there's nothing you can deduct from taxes.

If you sell from a taxable account, buy in your Roth and had a loss, the loss would change the cost basis of the shares you bought in your Roth. At that point, the loss is useless since you'll never be able to claim it on your taxes. At least that's my understanding.
Right. Never ever lose money in a Roth IRA if you can help it. You get no help from other taxpayers to pay for your losses.

However, if one did a Roth conversion, then one can recharacterize back to a traditional IRA and save some money on taxes.
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Old 01-15-2016, 03:33 PM   #888
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Right. Never ever lose money in a Roth IRA if you can help it. You get no help from other taxpayers to pay for your losses.

However, if one did a Roth conversion, then one can recharacterize back to a traditional IRA and save some money on taxes.
did my roth conversion at the end of the year... I'll give it a little time and see where it is... recharacterization may be the way to go
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Old 01-16-2016, 08:53 AM   #889
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Yep, within the Roth buy/sells don't matter since there's nothing you can deduct from taxes.

If you sell from a taxable account, buy in your Roth and had a loss, the loss would change the cost basis of the shares you bought in your Roth. At that point, the loss is useless since you'll never be able to claim it on your taxes. At least that's my understanding.
If the Roth transactions are not reported, how are they gonna know? I think the IRS has more profitable (for them) thing to do than try to keep individuals from scraping three grand (at most) from their taxable income. Kinda dumb to have laws that are not worth sending the national guard out to enforce, lol!, maybe not even worth sending a letter.

What exactly is the evil they are protecting against with wash sale rule anyway?
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Old 01-16-2016, 09:04 AM   #890
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The wash sale rule certainly was not meant to punish small investors. Just one of those side effects.

I don't play around with the IRS though. You never know when you will get a small guy in the audit department who has not met his monthly quota.
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Old 01-16-2016, 09:52 AM   #891
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The wash sale rule certainly was not meant to punish small investors. Just one of those side effects.

I don't play around with the IRS though. You never know when you will get a small guy in the audit department who has not met his monthly quota.

I agree. I'm not messing with IRS. It's not worth it.
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Old 01-16-2016, 09:44 PM   #892
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So the Oct 2007 high was 1575. The latest all time was 2131. A typical retracement after breaking the 200 day MA, if you believe the Fibonacci stuff.


50%. 1850
66%. 1750
100%. 1575

My call on November 13 was down to 1850.

I think we could move toward the 66% retracement of 1750, based on how bad this market is acting, but I will be surprised to see 1575 etc.

1750 puts us at an 18 percent correction, just shy of bear market territory of 1700.

Not that my call matters but I'm trading my mad money based on my premise, so posting it keeps me honest.
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Old 01-17-2016, 04:05 AM   #893
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Some of my T/A buddies see 1700-1750 as the more likely level, probably because it matches the 67% retracement, plus a strong support level.

I'm just using 1570 as my worst case scenario (I hope it's no worse).

I'm not doing anything, just modeling where my portfolio might be and my cut in income.

Small cap stocks are already in a bear market.
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Old 01-17-2016, 08:07 AM   #894
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A new retiree question:

Assuming 1880 or 1750 or 1570, we are down from prior highs. I know you said this was a planning exercise only.

So at what point do you actually cut your spending and reduce withdraw amounts - are you adjusting budgets real time in current period when 1880 happens, 1750 happens , 1700 happens or 1575 happens? or just speculating adjustments needed for, say Jan 1 2017 at your next withdraw period ?

What are the time triggers for your adjustment - quarterly. Monthly. Semiannual. Annual?

With volatile markets how do you avoid some knee jerk budgetary cuts while effectively managing overall spending ?

Btw. Reminds me of December 2008 when everyone's winter vacations all became winter staycations to quickly reign in spending as the market fell that first 25 percent. The next 35 percent was ugly.
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Old 01-17-2016, 09:34 AM   #895
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A new retiree question:

Assuming 1880 or 1750 or 1570, we are down from prior highs. I know you said this was a planning exercise only.

So at what point do you actually cut your spending and reduce withdraw amounts - are you adjusting budgets real time in current period when 1880 happens, 1750 happens , 1700 happens or 1575 happens? or just speculating adjustments needed for, say Jan 1 2017 at your next withdraw period ?

What are the time triggers for your adjustment - quarterly. Monthly. Semiannual. Annual?

With volatile markets how do you avoid some knee jerk budgetary cuts while effectively managing overall spending ?

Btw. Reminds me of December 2008 when everyone's winter vacations all became winter staycations to quickly reign in spending as the market fell that first 25 percent. The next 35 percent was ugly.
I do a fixed % of my portfolio for annual withdrawal each January (all in taxable). So if my portfolio drops, so does my withdrawal. This year I took about a 4.25% haircut. My retirement fund was already down 3.5% from the Jan 2015 withdrawal, and then it dropped another 0.8% due to the market selloff.

My after tax funds available for spending in 2016, however, are higher than in Jan 2015, because my taxes owed for 2015 versus 2014 are quite a bit lower. So from a practical spending money point of view there was no haircut, but rather a raise!

Currently, my withdrawal, after estimated taxes are set aside, is quite a bit higher than my actual spending. So for the last few good market years, I have accumulated quite a bit in short-term funds, as a rising market meant more withdrawn in $ each year - especially after the huge gain in 2013. I have these short-term funds to draw on when things go to hell. My "extras" travel budget is generously funded. As is the fund for some upgrades to the house. We have funds set aside to buy a new car. I have an extra year's expenses set aside in 1 year CDs something I have maintained since retiring. And still some left over. (Knock on wood!!!)

My paper exercise on 1/8/16 went something like this: assuming a drop of ~18% from 1/8, which brings up to 1570 on the S&P500, and about 30% from all time highs (close to an average bear market), the portfolio would probably take about a 9% hit from 1/8 levels. The smaller portfolio withdrawal from that lower level, after guesstimated taxes, would still exceed my current after tax spending budget. Knock on wood!!!! That is the test.

I hope I haven't seriously jinxed anything here!

When would I take less from the portfolio? I think I would be willing to take a smaller % withdrawal, closer to our spending budget, if I thought equities and bonds had corrected to "better valuations". That's very vague, of course, but a good bear market certainly means valuations have improved significantly. After the 2013 run up, even though withdrawals way exceeded our typical spending, I insisted on doing the full withdrawal each year because I felt like the punch bowl could be taken away any year now.
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Old 01-17-2016, 11:28 AM   #896
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Thanks for reply. Digesting it now .. !
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Old 01-20-2016, 10:16 AM   #897
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Sold more BND (total bond market index) and bought a big chunk of VBR (small-cap value) a few minutes ago.

I need an exit strategy, too. Sigh!
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Old 01-20-2016, 11:28 AM   #898
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Gimme a c
Gimme an a
Gimme a p
Gimme an I
Gimme a t
Gimme a u
Gimme an l
Gimme an a
Gimme an t
Gimme an I
Gimme an o
Gimme an n

What's that spell? Finally some capitulation and fear.

Oh. And maybe a Malox too...
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Old 01-20-2016, 12:25 PM   #899
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I'm buying more developed international at close of market today. This will allow me to sell some of my total international in the taxable account for tax loss harvesting. I'd put the sell in order today, but I'm at day 30 of a purchase so I need to wait until tomorrow.

Unfortunately I'm starting to run low on the FI side of the portfolio to buy equities. A good chunk of my FI money is tied up in Penfed CDs earning 3%.
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Old 01-20-2016, 12:35 PM   #900
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Bought more VTI today. Asset allocation back to

90:10

Got in at a price less than what I bought it for 2 years ago....

Let's see what happens to dividends - I would expect to see an 8-12 percent haircut. From current 2.07 to 1.85 or so during 2016.
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