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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81626  
Subject: Re: Existing stocks --> Roth IRA Date: 10/31/2007 7:17 AM
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I guess it wouldn't be worth doing in my case then. I haven't sold any stock this year so selling some at a loss doesn't really do anything for me.

Actually, it does, and you should consider it.

Up to $3000 of the loss can be used to offset ordinary income. If you have more than $3000 in losses to take, the additional loss can be carried forward to offset either capital gains or ordinary income in future years. So you don't 'lose' the loss.

Because marginal ordinary income rates are higher than marginal capital gains rates, it is actually be more beneficial to sell stocks with capital losses in a year that you haven't sold any stocks with capital gains, especially if you limit your losses to $3000.

Your only hitch would be transaction costs to sell in your taxable account and re-buy in your IRA. Plus to avoid any appearance of tripping over the wash sale rules, you will need to wait 31 days between the sale in the taxable accounts and the buy in the IRA.

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