[Sandra]

I researched in this FORUM and online. Would appreciate any advice.

I have some stock in a regular brokerage account at Fidelity that I would like to sell (at a loss) and then put the same stock to fund a Roth IRA. Based on my research I cannot buy the same stock within 30 days because of the wash sale tule. But I have to fund the Roth before April 15 to count for the 2022 tax year.  So I think I can fund the Roth with the proceeds of the sale and stick it in a money market account and after 30 days buy the stock. As long as the Roth is funded by April 15 it counts right ?

This sale will result in a loss that I can carry forward. Next year we will file married filing separately (related to public service loan forgiveness) and we can each deduct $1500 from our taxes.

Does this sound about right ? Thank you!

[Maya]

Yes, you can put the money into the Roth account and let it sit until 31 days later then re-buy.

[Ron]

It’s not a good idea to wait when you take a tax loss. If the market goes up 5% (example) while youre in money market you risk losing more than the benefit of the tax loss. Selling at a loss and waiting is equivalent to locking in the loss. Buy something that does not vioolate the wash rules but is expected to have similar performance to what you sold. If you say what youre selling, I can tall you what to that will be similar but not violate wash rules. There are tools also to do so
IMO if youre going to do tax loss harvesting, you should become comfortable with having a motley crew of funds that are really the same thing from a performance expectationos standpoint.

[Scott]

Wash sale rules apply across the board, and all the dodges have been factored in. You can make whatever plays you wanna make, maybe you won’t get bitten…immediately, but will you be able to sleep at night knowing you did something illegal to try to save a few bucks.

Seriously though, you check the penalties on wash sales? Not pretty.

[Author]

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