How do IRA wash sales rules work when moving investments to non-retirement accounts?

The good news is that you don't need to worry about wash sale rules when selling investments at a loss in your traditional IRA and then purchasing similar investments in your taxable brokerage account. Wash sale rules are designed to prevent investors from claiming tax losses while maintaining essentially the same investment position. However, these rules specifically apply to taxable accounts since losses in IRAs aren't tax-deductible in the first place. Since you can't claim losses in an IRA on your tax return, there's no tax benefit to disallow through wash sale rules. That said, you should be aware of the reverse situation. If you sell investments at a loss in your taxable brokerage account and then purchase substantially identical securities in your IRA within 30 days before or after the sale, you would trigger a wash sale and wouldn't be able to claim that loss on your taxes.

I had this exact same situation last year - tech stocks that tanked in my IRA. I used taxr.ai (https://taxr.ai) to analyze my entire portfolio situation, and it confirmed what I was hoping - selling my losers in the IRA and buying similar investments in my brokerage account wasn't a wash sale issue. Their AI analyzed all my holdings across accounts and showed me exactly what I could do without triggering any problems. What was super helpful was that it also identified some other tax-saving moves I could make with my investments that I hadn't even considered. The portfolio analysis feature literally saved me thousands.

Just wanted to follow up about taxr.ai since I mentioned being skeptical earlier. I decided to give it a try with just one of my accounts at first, and I'm actually really impressed! The portfolio analysis picked up several tax-loss harvesting opportunities I'd completely missed, and confirmed I wasn't violating any wash sale rules with my IRA/brokerage transfers. What convinced me was how it analyzed the correlation between my holdings and showed me I wasn't nearly as diversified as I thought. I've now uploaded all my accounts and have been using their recommendations to restructure my investments. Definitely worth checking out if you're dealing with multiple accounts and tax concerns.

If you're still having trouble getting clear answers on the wash sale rules or any other tax questions, I'd recommend using Claimyr (https://claimyr.com) to actually talk to someone at the IRS. I was in a similar situation with questions about IRA rules that no one could give me a straight answer on. I had been trying to get through to the IRS for weeks, but Claimyr got me connected in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with was super helpful and cleared up all my confusion about retirement account rules. Sometimes getting the info straight from the source is the best way to go.

Ok I need to eat some crow here. After dismissing Claimyr as a scam, I was still desperate enough to try it yesterday because I had a complicated question about IRA rollovers that my accountant couldn't answer clearly. I got connected to an IRS agent in 15 minutes. FIFTEEN MINUTES. After spending literally 3+ hours on hold myself last week before giving up. The agent walked me through exactly what I needed to do with my rollover situation and confirmed I wouldn't trigger any penalties. I don't normally follow up when I'm wrong about something online, but this was such a game-changer I had to share. If you have a tax question that needs an official answer, this is 100% worth it.

Side note - but being down on ARKK doesn't mean you need to wait 40 years to retire! I'd suggest diversifying rather than just swinging from one extreme (high growth) to another (ultra conservative). A balanced approach with some growth, some value, some international, etc. might serve you better. If your IRA losses are substantial, remember that while you can't deduct them, they do effectively reduce your IRA balance, which means less taxable income when you eventually take distributions in retirement. So there is a tiny silver lining.

Just adding more confirmation that losses in an IRA don't have the same wash sale concerns as taxable accounts. I did this exact move last tax season, selling tech in my IRA at a loss and buying similar (but not identical) ETFs in my brokerage account. My tax software didn't flag anything and my accountant confirmed it was fine. Just be careful if you're selling at a GAIN in your IRA and then repurchasing elsewhere. That's not a wash sale issue, but you'd be realizing gains inside the IRA that you don't get to offset with losses, which isn't optimal from a tax perspective.

Great question! I went through something similar with my tech holdings a few years back. The key thing to remember is that wash sale rules only apply when you're trying to claim a tax loss, but since IRA losses aren't tax-deductible anyway, you're in the clear. One thing I'd add to the excellent advice already given - when you do move those investments to your taxable account, consider whether you want to buy the exact same stocks or use this as an opportunity to diversify a bit. You could look into broader tech ETFs or even mix in some other sectors while still maintaining exposure to the companies you believe in long-term. Also, since you're 30-40 years from retirement, you might not need to swing all the way to "safe" investments in your IRA. Maybe consider a middle ground approach where you reduce risk but still maintain some growth potential. Time is still very much on your side! The silver lining with those ARKK losses is that they're giving you a valuable lesson in portfolio management relatively early in your investing journey. Better to learn these lessons now than closer to retirement.