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Self directed IRA's & Roth IRA's

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Self directed IRA's & Roth IRA's

Old 11-27-2016, 05:23 PM
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Default Self directed IRA's & Roth IRA's

What are the rules for gains from trading stocks in either of these IRS's? If I use either of them like a brokerage account to trade what are the tax implications on profits.
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Old 11-27-2016, 05:50 PM
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I invested in real estate held 2 years, sold it, then put gains and initial investment back into my fund. Use equity trust. Get used to 800 number if you want to use them but they are cheap and kind of helpful. Self directed is cool concept for those mavericks out there.



Originally Posted by bertss View Post
What are the rules for gains from trading stocks in either of these IRS's? If I use either of them like a brokerage account to trade what are the tax implications on profits.
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Old 11-27-2016, 05:53 PM
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You are only taxed on withdrawing from straight IRA, not on the profits it creates before you withdraw it. I also BELIEVE that roth's are not taxed when withdrawn (including profits) because you put taxed money away..
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Old 11-27-2016, 05:55 PM
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Originally Posted by bertss View Post
What are the rules for gains from trading stocks in either of these IRS's? If I use either of them like a brokerage account to trade what are the tax implications on profits.
No capital gains/losses on trades in IRA, Roth IRA, SEP, etc.
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Old 11-27-2016, 05:56 PM
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My understanding of a Roth is you will never pay taxes on any gains. Never!
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Old 11-27-2016, 06:02 PM
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Same as any other. In the Roth you can trade and not ever pay taxes on the gains or principal. With the regular IRA you pay tax at the income tax level when you withdraw or have to take RMD.

This is assuming you meet all the other requirements like being the correct ege etc.
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Old 11-27-2016, 06:28 PM
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It looks like the Roth is almost to good to be true. Anyone could make as much money as they could and never pay any tax on it after they turn 59 1/2. Why isn't everyone doing this, it seems like it would be the best way to trade if you can wait to the correct age before withdrawing money.
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Old 11-27-2016, 06:36 PM
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Originally Posted by bertss View Post
It looks like the Roth is almost to good to be true. Anyone could make as much money as they could and never pay any tax on it after they turn 59 1/2. Why isn't everyone doing this, it seems like it would be the best way to trade if you can wait to the correct age before withdrawing money.
You can't put an unlimited # of $'s away. And the money you put into a Roth is taxed money as opposed to PRE tax in a standard ira
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Old 11-28-2016, 05:41 AM
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You can also get around Roth IRA income limits by funding a traditional Ira and then rolling it to a Roth IRA.
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Old 11-28-2016, 06:16 AM
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if you roll not taxed money from a IRA into a Roth IRA you would need to pay the taxes on the money would you not?
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Old 11-28-2016, 06:50 AM
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Originally Posted by 99yam40 View Post
if you roll not taxed money from a IRA into a Roth IRA you would need to pay the taxes on the money would you not?
I believe so, maybe not the penalty but ....

Disclaimer : I am not nor ever was in the field so I could be wrong
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Old 11-28-2016, 07:37 AM
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IRAs, whether Roth or Traditional, can be required to file a tax return and pay tax. This is extremely rare though and I have not personally run across it yet.

Normal passive gains like dividends and interest are fine but you need to be aware of unrelated business taxable income (UBTI). Too much UBTI and your IRA can be required to file a tax return and pay tax.

One thing you need to be worried about if you have a lot of money in an IRA are Publicly-traded Partnerships. (I have never heard of a 401(k) having PTPs as an investment option) These can spit out UBTI like crazy. This info will be on the K1 in Box 20 with a "V" code.

Others have mentioned owning rental property in an IRA. Rents are usually not trade or business income so no UBTI issues really. (There are some but not going to get into.) These have their own issues that you need to talk to someone who knows what they are doing if you want to go that route. I have seen a few of these go really bad.

All expenses for the rental need to be paid by the money in the IRA. You get money into the IRA with rental income and/or contributions. There are limits to how much you can contribute to the IRA each year. If your tenant stops paying rent, you better hope you have enough cash in the IRA to pay the bills.

I personally stick with stocks, bonds, ETFs, etc in my IRA. Way less of a hassle.
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Old 11-28-2016, 08:37 AM
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Gains of any kind in an IRA or Roth IRA are not taxed when earned, with a narrow exception as noted above. In the case of that exception, your IRA/Roth custodian must file the tax form and it's paid under a different taxpayer ID# than your Social Security number. I've had income in an IRA subject to income tax in the year earned, from certain income in a limited partnership investment.

It doesn't matter whether the gain was interest, dividend or capital gain, when the money is withdrawn from the IRA it will be taxed at regular income rates.
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Old 11-28-2016, 09:11 AM
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Originally Posted by yarcraft91 View Post
Gains of any kind in an IRA or Roth IRA are not taxed when earned, with a narrow exception as noted above. In the case of that exception, your IRA/Roth custodian must file the tax form and it's paid under a different taxpayer ID# than your Social Security number. I've had income in an IRA subject to income tax in the year earned, from certain income in a limited partnership investment..
Before completing my income taxes this year (after an extension), I went to our local IRS office and got a print out of what items had been reported to them. The current total of my Fidelity IRA Rollover accounts were sitting right there--identified by my social security number.
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Old 11-28-2016, 09:24 AM
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Originally Posted by Bamaman View Post
Before completing my income taxes this year (after an extension), I went to our local IRS office and got a print out of what items had been reported to them. The current total of my Fidelity IRA Rollover accounts were sitting right there--identified by my social security number.
Yes, your IRA totals are reported by the account custodian to the IRS each year. When you are old enough to have Minimum Required Distributions (MRD), that reported amount is used to determine the size of the MRD for that year.
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Old 11-28-2016, 04:54 PM
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roth IRA's have an income limit for eligibility to contribute, but traditional IRAs do not.

You may not be eligible to contribute if your income is $131k or more in tax year 2015 and $132k or more in tax year 2016 for single filers or $193k or more in tax year 2015 and $194k or more in tax year 2016 for joint filers
https://individual.troweprice.com/pu...KCl8Cn&ATLID=1
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Old 11-28-2016, 05:14 PM
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Originally Posted by happyjack92 View Post
roth IRA's have an income limit for eligibility to contribute, but traditional IRAs do not.



https://individual.troweprice.com/pu...KCl8Cn&ATLID=1
Technically yes, practically no.

You can contribute to a IRA and immediately convert the contribution to a Roth IRA regardless of your income. I've done it for years.
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Old 11-28-2016, 06:21 PM
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Originally Posted by yarcraft91 View Post
Technically yes, practically no.

You can contribute to a IRA and immediately convert the contribution to a Roth IRA regardless of your income. I've done it for years.
Good point but be careful if you have existing traditional IRAs funded with pretax dollars as you could end up having to take a portion into income.
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Old 11-29-2016, 02:18 PM
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Originally Posted by Trollin4Tuna View Post
Good point but be careful if you have existing traditional IRAs funded with pretax dollars as you could end up having to take a portion into income.
Roll them all to your 401k, then do the backdoor Roth
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Old 11-29-2016, 06:50 PM
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