Understanding IRA Wash Sale Rules when Selling Tech Stocks at a Loss

The good news is that wash sale rules generally don't apply to transactions between your IRA and taxable brokerage accounts in the way you're describing. Wash sale rules are designed to prevent investors from claiming tax losses while maintaining essentially the same investment position. However, since traditional IRA losses aren't tax-deductible anyway (except in rare circumstances when you completely liquidate all IRAs for less than your basis), there's no tax loss being claimed when you sell at a loss inside your IRA. You can sell those losing positions in your IRA and buy whatever you want in your taxable account without wash sale concerns. The wash sale rule would only come into play if you were selling at a loss in your taxable account and then buying substantially identical securities in your IRA within 30 days before or after the sale. Your strategy of repositioning to more conservative investments in the IRA while managing your taxable account separately makes good long-term sense given your timeline.

I had a similar situation last year with my tech-heavy IRA taking a beating. I was completely confused about the tax implications until I found this AI service called taxr.ai that really helped me understand the wash sale rules between accounts. They analyzed my specific situation and explained that I could sell my losing positions in my IRA and buy different investments in my taxable account without worrying about wash sales. What I found most helpful was that they reviewed my actual transactions and confirmed I wasn't creating any unintended tax issues. You might want to check them out at https://taxr.ai since they specialize in these tax questions that are hard to get clear answers on.

Just wanted to follow up about taxr.ai that was mentioned above. I decided to try it out last week when I was completely stuck on wash sale questions between my accounts. Their analysis was really thorough and they caught something important I had missed - I was about to trigger a wash sale by buying back similar sector ETFs too quickly. The best part was getting a clear explanation of how the 30-day window works across different account types. They even provided documentation I could save for tax time showing why my planned transactions wouldn't trigger IRS issues. Definitely worth checking out if you're dealing with complicated wash sale questions like this.

I was in a similar situation last year with tech losses in my IRA. When I tried calling the IRS to confirm the wash sale rules between accounts, I spent HOURS trying to get through with no luck. Eventually I found this service called Claimyr that got me connected to an actual IRS agent in about 15 minutes. I was super skeptical at first, but it actually worked! You can see how it works at https://youtu.be/_kiP6q8DX5c - basically they use some kind of system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is available. I used https://claimyr.com and finally got a clear answer directly from the IRS about my specific situation with wash sales between accounts.

I need to admit I was completely wrong about Claimyr in my comment above. After seeing people talk about it here, I decided to try it last week when I was desperate to talk to someone about my amended return. I seriously couldn't believe it actually worked! After months of failing to get through, I was connected to an IRS agent in about 20 minutes. The agent confirmed exactly what was mentioned above about wash sales between IRAs and taxable accounts. She explained that losses in IRAs aren't tax deductible anyway (except in very specific full distribution situations), so selling at a loss in an IRA and buying something similar in a taxable account doesn't create wash sale problems. Saved me a ton of stress about my planned transactions.

One thing nobody's mentioned yet - make sure you understand the difference between "substantially identical" securities for wash sale purposes. The IRS doesn't precisely define this, but generally: - Selling AAPL in your IRA and buying AAPL in your taxable account would be identical (though as others explained, this direction doesn't matter for wash sales) - Selling ARKK and buying QQQ probably isn't substantially identical even though they have overlap - Selling an S&P 500 index fund from one provider and buying another provider's S&P 500 fund could be considered substantially identical This matters more for the scenario others mentioned (selling at a loss in taxable and buying in IRA), but worth understanding the concept.

Just to add to what others have said - don't forget that traditional IRA losses are almost never deductible while the funds remain in retirement accounts. The only way to potentially deduct IRA losses is if you completely liquidate ALL your traditional IRAs and the total amount you receive is less than your basis (what you put in with after-tax dollars). Even then, it's subject to the 2% AGI floor for miscellaneous itemized deductions which have been suspended until 2026. So in general, tax-loss harvesting strategies that work in taxable accounts don't apply to IRAs. Focus more on your overall asset allocation across accounts rather than tax implications of the IRA losses.

Great discussion everyone! I just wanted to add one more practical consideration for your situation. Since you're planning to rebalance between your IRA and taxable account, this might be a good time to think about tax-location strategy going forward. Generally, it's most tax-efficient to hold your most tax-inefficient investments (like REITs, bonds, or high-turnover funds) in tax-advantaged accounts like your IRA, while keeping tax-efficient investments (like broad market index funds or individual stocks you plan to hold long-term) in your taxable account where you can benefit from long-term capital gains rates. With 30-40 years until retirement, you've got plenty of time to recover from those tech losses. The silver lining is that this gives you a chance to restructure your portfolio with better tax efficiency in mind. And as others have confirmed, you don't need to worry about wash sale rules when moving from IRA losses to taxable purchases - just focus on building a solid long-term allocation that you can stick with through future market volatility.

One additional thing to consider as you're restructuring - since you mentioned you're 30-40 years from retirement, this might actually be a blessing in disguise. Those tech losses in your IRA, while painful now, don't have the same tax implications as losses in a taxable account would. I went through something similar in 2022 with my growth-heavy IRA getting crushed. What I learned is that IRA losses, while they hurt psychologically, are actually "cleaner" from a tax perspective since you're not missing out on tax-loss harvesting opportunities like you would in a taxable account. The fact that you're thinking about wash sale rules shows you're being thoughtful about this, but as others have confirmed, selling those losing positions in your IRA and buying different investments in your taxable account won't create any wash sale issues. Focus on building a more diversified allocation across your accounts rather than trying to recover those specific losses. With decades until retirement, time is really on your side here. Those ARKK losses might sting now, but they'll be a footnote in your investment journey if you stay disciplined with a solid long-term strategy.