What is the wash sale rule and how does it affect my retirement accounts?

What is the wash sale rule and how does it affect my retirement accounts?

The wash sale rule prevents you from claiming a tax deduction for a security sold at a loss if you repurchase the same or substantially identical security within 30 days.

So, if I sell a stock in my IRA at a loss, can I buy it back immediately?

Yes, you can buy it back immediately in your IRA, but the loss won't be deductible for tax purposes due to the wash sale rule.

Does this rule apply to all types of retirement accounts?

Yes, the wash sale rule applies to all retirement accounts, including IRAs and 401(k)s.

What should I do if I want to avoid triggering the wash sale rule?

To avoid triggering the wash sale rule, consider waiting at least 31 days before repurchasing the same security or invest in a different asset.