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URL:  http://boards.fool.com/what-happens-to-the-balance-after-that-first-11078543.aspx

Subject:  Re: Roth IRA trading and taxes Date:  7/23/1999  7:53 AM
Author:  rhecker Number:  12494 of 76243

What happens to the balance after that first purchase? It could be less then $100 left over. If you add that to the "kitty" for next year's $2000 addition does that mean you can buy more stock?

I'm guessing you have your IRA with a broker, and that there's a set-up where your daily cash balance is swept into a money-market account when it hasn't been used to buy any stocks. If you buy stocks for $1960 (including comission) and still have $40 left, that $40 will be swept into the money-market account. The stocks as well as the $40 are all still part of your IRA. If you don't do any additional buying or selling and you add $2000 next year, you will have $2040 with which you are able to buy stocks within your IRA (plus interest on the $40 which you earned from it being in the money market account all that time).

I hope this helps!
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