IRA Rules

Posts Tagged ‘tips’

Question: Does the pattern daytrading rule apply to retirement accounts, like an IRA?

If I buy a 50 shares of say QID in the morning. Then later buy another 50 shares of QID later that day. Then before market closes the same trading day, I sell all 100 shares. Does that count as 1 or 2 roundtrip trades?

Answer: I would say one but ask your account rep. The deal with IRA“s is that you must wait three days for funds to settle before you can sell twice. In other words if you own 50 QID and sell it you may then use those funds to buy QID or something esle but cannot sell again until funds settle or you will be in violation of the free ride rule. In odrer to day trade much you would need a very large cash reserve. I couldn’t tell you if the 5 pattern day trades per week applies to an IRA but I see problems attempting to day trade the account because of the affore mentioned rule.

Estate-Planning_IRAs.mp4

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

Question: Questions regarding 401(k). 70 year old, still working?

Person was 70 on 12/25/07 and is still working full time. She has a 401(k) Profit Sharing plan where she works. Does she have to start taking out of it this year? 70 1/2 rule. Can she establish a Traditional IRA at her bank and roll it over to that, or would that make any difference? Any advice or details would be appreciated!

Answer: As long as you are still working, contributions can continue to that 401(k) and you don’t have to start withdrawals, but distributions must start on IRAs starting for the year during which you reach 70 1/2. If you then roll the money into an IRA, it’s no longer in a 401(k) with the company you are currently employed with, is it?

The penalty for not taking the Required Minimum Distribution is a whopping 50% of what you were supposed to have taken out.

Stocks, Mutual Funds & Retirement Investments : What Are the Rules of Short Stocking?