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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.
I’m not aware of any rule that a brokerage monitors wash sales unless there’s some kind of setting on the account that you could change? What if you wanted to change holdings, because you liked a new index fund better? Has T Rowe banned that? So that sounds like it’s just incorrect.
I think what you really want to do is ask their rep to take you thru step by step, what exactly triggered the issue (not quoting a policy without reference to the trigger). I say that because you may be missing the transactions that triggered a violation. The walk thru will let you make the adjustments you need.
I’d also ask how they expect you to make RMDs if you can’t sell things off.
Thanks for the input.
Regarding your first paragraph mentioning monitoring I agree it is an IRS issue, but the supervisor said they use that rule for frequent trading. She just kept repeating it like a robot. I even called back and talked to another customer service rep and asked if I could sell the fund and put the proceeds into a settlement fund and wait the thirty days, but it appeared this concept was totally foreign to her.
Glad my funds are in Vanguard!
Good luck with it cause I think I’d lose my cool dealing with them
I have a TWP account and haven’t experienced nonsense like this. You describe 1 transaction from each account; how is that frequent trading? And what you did had nothing to do with a wash.
You need to talk to someone with a brain.
I agree with your first point. Regarding your last point apparently the supervisor.
An online search yielded this link. Not sure if it’s up-to-date. Might be worth quoting it (e.g., the first bullet point: “Shares purchased or redeemed in money market funds”) in another call to T. Rowe Price. If you get the same supervisor, ask to speak to a different one (even supervisors can make mistakes).
Thanks for the info. What frustrates me is they’re saying if you sell 5k or more (mine was 12 k, a paltry sum) from a fund you can’t sell (my request @58k, not an amount that will move any needle) any more for thirty days. What if the markets are sliding and someone wants out? Do they say so sad?