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To which accounts does the wash sale rule apply?

The wash sale rule applies to all of your accounts, including your non-taxable retirement accounts, no matter where they are held. If you have multiple accounts with Wealthfront, we will monitor trades across your entire Wealthfront investment portfolio to avoid wash sale issues. If you also hold our selected ETFs in non-Wealthfront accounts, you should be mindful of the wash sale rule.

We keep our tax-loss harvesting clients up-to-date on the ETFs we may choose on their behalf. We may trade these same ETFs on a client’s behalf throughout the year (depending on market conditions). Clients who trade these ETFs elsewhere (or their index fund share classes), will need to verify that the wash sale rule has not invalidated short-term losses that we harvest for them. Note that if you are married, your spouse buying or selling an investment has the same effect as you buying or selling that investment for purposes of the wash sale rule.

Please consult with your personal tax advisor to confirm whether your non-Wealthfront accounts, if any, may be subject to wash sale restrictions. Investors and their personal tax advisors are responsible for how the transactions in both Wealthfront and non-Wealthfront accounts are reported to the IRS or any other taxing authority.

 

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Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.