IRA Rules

Archive for December, 2005

Question: Taking a loss on Roth IRA and contributing to Simple IRA?

I closed my Roth IRA account in 2009 to claim losses on it. Now, I have an option to contribute to simple IRA for 2009 and I am thinking about it. If I open a simple IRA now and contribute to it for 2009, will it somehow interfere with my claiming losses on Roth IRA account? I am asking because the rules say the IRA accounts has to be closed to claim losses on it so I am concerned that if I open another IRA account it might somehow set a red flag at IRS.
Thanks.

Answer: If you closed *all* of your Roth accounts and can show that the total distributed was less than the amount of after-tax money you put in, you can deduct the loss on schedule A in the 2% section. For most people, this is worthless deduction.

Opening a new IRA is not the same as rolling the money over. Nor is it a Roth account, so you still meet the test that all Roths have been closed.

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