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Author: btmart One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: Wash sale in a Roth? Date: 9/19/2008 1:50 PM
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Hello -

Just a quick question - do "wash sale" rules apply in a Roth account (which has no tax implications)?

I happened to buy GE in my Roth account earlier this week at $22.63, I sold this morning above $27, and I fully expect to buy it back early next week at a lower price. Since none of these events trigger any taxes, do I have to declare anything? My account history says "NFS Cross Trade" on this morning's sale, but that may just be because the transfer of my purchased shares hadn't happened yet.

Thanks a lot...good luck in the coming weeks...Brad
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Author: zol Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101925 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 2:02 PM
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Do you have any other sale of GE that resulted in a loss? The transaction that you mentioned does not trigger the wash sales rule.

- zol

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Author: btmart One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101926 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 2:17 PM
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No I have no other GE...the purchase earlier this week was my first with the company.

I know (I think) that if I sell in a taxable account and buy in a non-taxable account, that could trigger wash implications, but I thought since both sale and purchase were non-taxable events, that there will be no wash implications.

THANKS! Brad

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101927 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 2:28 PM
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Not only do the Wash Sale Rules not apply in a Roth or other IRA or 401k account, but in a taxable account the trade must be at a loss, and there must be an open trade within 30 days for and aft for the Wash Sale Rules to apply.

ed

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Author: Hohum77 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101928 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 2:40 PM
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I happened to buy GE in my Roth account earlier this week at $22.63, I sold this morning above $27, and I fully expect to buy it back early next week at a lower price. Since none of these events trigger any taxes, do I have to declare anything? My account history says "NFS Cross Trade" on this morning's sale, but that may just be because the transfer of my purchased shares hadn't happened yet.

Thanks a lot...good luck in the coming weeks...Brad


The Roth transactions you describe do not need to be tracked.
The scenario you presented is a gain. Even in a taxable account you would
be nowhere near a wash-sale scenario. You would actually need at least three more GE transactions to trigger a possible wash sale event there.


YMMV, a little scary to see GE as a trading vehicle ;)

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101929 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 3:32 PM
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Transactions with a ROTH or Traditional IRA are not reported. Tax liability is determined when distributions are taken.

Wash sales are only triggered by losses, so you don't have a wash sale.

Do not trigger a wash sale by mixing transactions in a taxable and tax defered account.

IRAs do not allow margin transactions. Since they are treated as "cash" accounts, you could run into problems rebuying the same stock before the previous sale of that stock settles. Make certain that you understand the rules or your account maybe frozen for violating them.

Debra

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101930 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 5:17 PM
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IRAs do not allow margin transactions. Since they are treated as "cash" accounts, you could run into problems rebuying the same stock before the previous sale of that stock settles.

I would doubt that. My IRA accounts make the sale proceeds available immediately for purchases (but not for withdrawal) during the 3-day period. There's nothing in IRA law that would prevent this, which is much different from trading on margin.

Phil

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101931 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 5:30 PM
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I would doubt that. My IRA accounts make the sale proceeds available immediately for purchases (but not for withdrawal) during the 3-day period. There's nothing in IRA law that would prevent this, which is much different from trading on margin.

Phil


It is best to verify the rules before finding out by have trading in the account suspended. I don't trade frequently enough in our IRAs to be certain if the funds are made available before settlement date or not.

Debra

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101932 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 6:11 PM
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I don't trade frequently enough in our IRAs to be certain if the funds are made available before settlement date or not.

I don't normally, either. But in the last week, I've had a bit of experience with it. Funds were available for trading as soon as the sale happened in my IRA.

Still, I agree it can't hurt to double check with your broker if you're concerned about the issue.

--Peter

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101933 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/19/2008 6:25 PM
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I agree it can't hurt to double check with your broker if you're concerned about the issue.

Me too. How do you think I found out about mine?

Phil

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101936 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/20/2008 1:14 AM
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Did you see this tonight? GE is listed:

<<<Pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades greater than 20% away from the prior day’s close executed today between 9:30 and 10:30 a.m. ET. This decision cannot be appealed. MarketWatch has coordinated this decision with other UTP Exchanges except CBSX, NYSE & AMEX. NASDAQ will be canceling trades on the participant’s behalf. This decision cannot be appealed. The stocks affected are as follows with the reference price (previous close) to calculate the high & low break point: AFL ($64.25), CPA ($35.03), EQR ($49), FCL ($37.11), FFCH ($26.31), GE ($24.79), GLDC ($1.908), IJS ($68.85), IWN ($70.34), KBE ($35.83), MCO ($36.6), OKE ($36.49), OLP ($16.82), PCL ($56), PCP ($88.15), PJB ($23.49), PRU ($83.99), PSL (26.1492), PX ($82.16), RKH ($111.7), RNR ($50.63), SSO ($53.17), STT ($59), TCBI ($20.36), TGT ($55.53), UNM ($24.95), VEU ($43.58), WFC ($37), IWO ($74.5608), IJT ($64.52), PSL ($26.1492), IWN ($70.34) The list of reference points with high and low break points will be posted on NASDAQTrader.com shortly.>>>

Some crazy stuff going on in the market. $27 for GE seems to be below the 20% threshhold for a busted trade.

Lethean

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Author: btmart One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 101956 of 121144
Subject: Re: Wash sale in a Roth? Date: 9/24/2008 11:40 AM
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<<YMMV, a little scary to see GE as a trading vehicle ;)>> - Hohum

I assure you I was hesitant about using GE as a "trading vehicle" as well, not what I typically do. (I'm not sure I've ever done such a thing...)

But I felt good last week about having the cash in these troubled times, not to mention making the 20% profit in two days.

And, sho 'nuff, GE hits $24 today. Unfortunately, I didn't have the patience to wait, so I bought my shares back yesterday at $25.25. I'm excited about having GE in my retirement account (long-term this time, I think), and I've got $454 more that I didn't have in my account this time last week.

Good luck...Brad

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