I have the following funds in a Roth IRA in a Fidelity account, and am determining if it is worth switching funds for a few of them. I mainly picked these because they have low expense ratios. I'm in my late 20s so not planning to cash out for a while, but was wondering if changing funds now to realize gains later on, or if at this point, it doesn't matter. I am also curious about the tax implications in switching funds, or since it's a Roth IRA, whether that is applicable.

FNILX: +4.62% since buy, life of fund +6.5%

FSKAX: +17.29% since buy, life of fund +7.6%

FXAIX: +3.62% since buy, life of fund +10.2%

FZIPX: -2.15% since buy, life of fund -5.96%

I skimmed a John Bogle book, so that is the extent of my investing knowledge.

  • Assuming USA (due to "Roth IRA") - is this accurate?
    – yoozer8
    Commented Jul 7, 2020 at 16:27

3 Answers 3


Any investments and gains in a Roth IRA will not be taxable. You can reallocate your investments as you like without worrying about having to pay taxes on any realized gains.

The only potential tax implication losing the ability to deduct a loss you incurred (in a taxable account), which would normally be deductible, due to the wash sale rule. The IRS defines was sale (emphasis mine) as:

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

  1. Buy substantially identical stock or securities,
  2. Acquire substantially identical stock or securities in a fully taxable trade,
  3. Acquire a contract or option to buy substantially identical stock or securities, or
  4. Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA.

If you have recently sold (or in the near future will sell) at a loss any funds in a taxable account, make sure not to buy those same funds within 30 days of the sale, or you will not be able to deduct the loss.

  • Does 'acquiring substantially identical stock' apply to index funds? A lot of my funds are large blends, so I'm wondering if consolidating a few of my funds into one would potentially trigger a wash sale.
    – sanjayr
    Commented Jul 8, 2020 at 16:50
  • Maybe. I think it depends on exactly which funds are traded, and how your broker reports it. If it's exactly the same fund, wash sale. If different funds, probably OK but maybe not. See money.stackexchange.com/a/53962/36669 for one scenario. I'd suggest further research, or consultation with a professional, to determine if your intended consolidation specifically would constitute a wash sale
    – yoozer8
    Commented Jul 8, 2020 at 16:57

Specific investment advice is off topic, but any transactions within a tax-advantaged account have no immediate tax implications, so there's no need to be concerned from a tax standpoint. You only need to be concerned about tax when you withdraw funds from the account.


Because this is a Roth IRA there is no tax due on these transactions. It won't be due this year or in the future, unless you make a withdraw from the Roth IRA that doesn't follow the rules. Selling a fund within the Roth IRA account and keeping the money within the account doesn't count as withdraw.

This is a strength of a Roth account, there is no tax consideration when deciding to re-balance those funds.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .