IRA Rules

Posts Tagged ‘grammar’

Question: Roth IRA INVESTING QUESTIONS?

I recently opened a Roth IRA with TradeKing.

I know I can’t withdraw tax free until about 60 years old, but does that also include selling, or only when I take money out of my brokerage account?

I was going to use this account for my dividend stocks, since they won’t be taxed correct? Is this a good plan?

What are the rules for Roth IRA selling, am I never taxed on realized gains, shortterm or longterm?

Thanks

Answer: You can buy and sell within a Roth IRA account all you want. There are no taxes on any money earned either as dividends, interest or capital gains. Now here is something that you should seriously consider. Dividends under current tax law get taxed at a reduced rate. That law might change though. In fact I expect it to change. There are some exceptions to this law. The main one is dividends from REITs and Limited Partnerships. These are taxed at the full tax rate. Also interest is taxed at the full tax rate. So REITs and LPs and interest within a Roth IRA get a better tax break than regular dividends. Also short term capital gains get a better tax break within a Roth IRA than do long term capital gains. If you ever were to have the desire to be a short term trader it would be an advantage to use a Roth IRA account to do so provided you can make a profit at it. Losses within a Roth IRA are a total loss.

Marie Handy, WBRZ, 1990: Spotlight on Seniors – Individual Retirement Accounts