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Subject:  Re: newbie IRA question Date:  3/4/2004  5:43 PM
Author:  dougdoogle Number:  39683 of 87994

>>>In regard to IRA accounts held with brokerages like Ameritrade, eTrade or Harrisdirect and the like. Can those who have these accounts participate in short term trading? That is, holding stocks less than a year.<<<


>>>If so, are the tax implications the same, since it is an IRA account?<<<

Yes, if "the same" means gains are taxed the same as dividends, capital gains, etc. within the account.

>>>For example, if I had any amount of money in an online IRA account, I could conceivably do short term day trading to increase my IRA account balance. But am I subject to the short term gains taxes the same as a regular traded account where I can withdraw the amount without penalty?<<<

If it is a Roth IRA, you will never pay taxes on the gains. If it is a Traditional IRA, you will pay, when you eventually retire, taxes at the same rate as your ordinary income at that time. So it would make no difference whether your gains were from short or long term cap gains.

Nothing personal, but statistically speaking, you are more apt to decrease than increase your account balance by day trading.


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