IRA Rules

Posts Tagged ‘finance’

Question: Withdrawal of excess contributions to IRA – which form?

I contributed too much to my Roth IRA for 2007.. I withdrew the excess last week. What form do I use to report the capital gain, Sch D or something else?

Answer: It isn’t a capital gain. The earnings go on line 21 as “other income”–you also need form 5329 to figure the penalty.

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Question: Day trading in an IRA rules?

What would be considered day trading in an IRA? Does it have to be the same stock traded, bought and sold in the same day? I do trade in my IRA, I will hold a stock for at least 2 days before selling. If I bought APPL, CIT, and BAC on one day, held them for 2 days or more, then sold one or two and bought BA, CAT, LVLT. Would that be considered day trading? Would trading back and forth between stocks within a week be allowed within an IRA?

Answer: The SEC’s definition of a day trader is someone who makes 3 or more intraday trades in a five business day period. So if you bought some stock and sold them the next day that wouldn’t count. If you wish to make more than 3 intraday trades a week you will have to maintain a 25k balance in your account or the SEC will freeze your account.