No, tax loss harvesting only works in taxable (non-retirement) accounts. IRAs, 401(k)s, and other tax-advantaged retirement accounts already grow tax-deferred or tax-free, so losses within these accounts provide no tax benefit. In fact, selling at a loss in an IRA means you've permanently lost that value with no tax offset. This is why comprehensive planning separates tax-efficient strategies by account type—tax loss harvesting for taxable accounts, while retirement accounts focus on other optimization strategies.

Tax loss harvesting reduces your Modified Adjusted Gross Income (MAGI), which Medicare uses to determine your Part B and Part D premiums. Since Medicare looks at your income from two years prior, strategic harvesting at ages 61-63 can help you avoid Income-Related Monthly Adjustment Amounts (IRMAA) surcharges when you enroll at 65. IRMAA thresholds start at $106,000 for individuals ($212,000 for couples), with premiums increasing in tiers. Harvesting losses to stay below these thresholds can save $1,000+ annually in Medicare costs.

Yes, but the order matters. Capital losses first offset capital gains of the same type—short-term losses offset short-term gains, and long-term losses offset long-term gains. If you have remaining losses, they can offset the opposite type of gain. After offsetting all capital gains, you can deduct up to $3,000 of remaining losses against ordinary income ($1,500 if married filing separately). Any additional losses carry forward indefinitely to future tax years, providing ongoing value for your tax planning strategy.

Market downturns create excellent harvesting opportunities, but this shouldn't change your long-term investment strategy. The key is to harvest the loss while maintaining your desired market exposure by investing in a similar (but not identical) replacement security. This way you benefit from both the tax savings and any market recovery. Many sophisticated investors view market volatility as a chance to improve their after-tax returns without altering their strategic asset allocation or taking on market timing risk.

While you can harvest losses yourself, working with a fiduciary financial advisor ensures you maximize the strategy's benefits while avoiding costly mistakes. Advisors can systematically identify opportunities year-round, ensure wash sale rule compliance across all your accounts, coordinate harvesting with your broader tax strategy (like Roth conversions or capital gains events), and integrate harvesting with portfolio rebalancing. For high-net-worth individuals and retirees with complex tax situations, professional management typically saves significantly more than it costs.