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I’m wondering if any other HD readers have run into this policy at TRowe Price?
Here’s what happened:
I am trying to get my year end portfolio in alignment. I am trying to generate cash to fund my taxable withdrawals from two inherited IRAs for the next two years.
On 1/29 I sold a balanced fund in an account in mother’s name and transferred the proceeds into a money market fund in the same account.
Today I tried to do the same trade in my father’s account and a T Rowe supervisor said I could not do that due to their frequent trading policy as the first sale was > 5K. The supervisor quoted the wash sale rule as the reason I could not complete the sale.
My understanding of the wash sale rule is, you can’t sell shares of stock or other securities for a loss and then buy substantially identical shares within 30 days before or after the sale. If you do, the loss is disallowed for tax purposes.
First of all the sales I was trying to accomplish were in separate accounts, and I’m not claiming a loss. Also isn’t this rule only regarding taxable accounts, not tax deferred accounts?
If what he supervisor told me is true one can only make 12 sales per year unless the amount is less than 5K which is a paltry amount. Why would anyone with significant funds have their money with this mutual fund company.
Can anyone else make sense of this policy?
Update:
Was able to make trade today. Spoke to a supervisor, she reported trade should have been allowed. I requested an investigation and retraining of staff involved in incident.
If having cash in the taxable account is necessary for spending, of course you want to figure this out. But if not, have you considered “in-kind” distributions of the balanced fund into the taxable account? The cost basis of the balanced fund would then be stepped-up, you would remain invested, and the investment could be more tax-efficient than distributing cash into a money market account (e.g., qualified dividends vs. interest income).
For my RMDs, I select individual stocks to distribute that likely have good growth potential and which could otherwise increase future RMDs. That works for me in two ways, both because I like to buy and hold and also earnings-wise.
Don’t know anything about TRP, but the wash sale rule applies if the stock is bought within that window in any account, including a non-taxable one, and including those of your spouse.
For example, if I were to sell a stock at a loss in my taxable account today, but there was a dividend reinvested in that stock last week in my wife’s IRA, that would be a wash sale.
That’s what is confusing me as this is an inherited IRA, not a taxable account. Plus I’m selling a balanced fund and buying a treasury money market, so they are not even the same.