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The basics
Gain harvesting models selling appreciated holdings and reinvesting the proceeds. The account stays invested, while the gain becomes taxable income and its cost basis rises.
In Tax Planning, choose the participating accounts, active years, target capital-gains bracket, and any annual cap or income guardrail.
Illustrative numbers
Raise basis without changing the holding’s value
Account value before harvesting$100,000
Cost basis before harvesting$60,000
Gain realized$10,000
Basis after harvesting$70,000
Before any tax-funding withdrawals, the account is still worth $100,000. It now has $30,000 of embedded gain instead of $40,000.
Calculation transparency
How it works in MoneyWhatIf
- 01
Step 2 of Tax Planning normally includes the realized Roth-conversion schedule from Step 1. Ordinary income already used by conversions reduces the room available for gains.
- 02
The search stops at the selected gains bracket and applicable enabled guardrails. The optional NIIT guardrail applies only when selected; do not assume it is always active.
- 03
Only chosen eligible accounts have their basis raised. The amount is limited by their embedded gains and by the strategy’s window and cap.
- 04
The year-by-year explanation reports why a year harvested or did not harvest. Compare the overall funded outcome, including tax, cash needs, and later withdrawals.
Keep in mind
Model limits
This is a planning transaction; it does not send trades to a brokerage or choose security lots.
A favorable federal bracket alone does not prove a strategy helps. Review state tax, NIIT, marketplace coverage, and the later IRMAA effect.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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The words behind it
Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.