JRB,I have read a whole lot about Roth IRAs including most of the information on this site, and I have not come across anything that indicates there would be any kind of capital gains taxes on trades made within a Roth IRA. BUT there are major penalties for non-qualified early withdrawls. This is an excerpt from some Roth IRA tax FAQ taken from http://www.fool.com/School/Taxes/1998/taxes981218.htmUnless an exception applies, any distribution from a Roth IRA before an individual reaches age 59 ½ will be subject to an "early withdrawal penalty" in the amount of 10% of the amount of the distribution required to be included in your gross income. Be very careful NOT to confuse the early withdrawal penalty with the taxes imposed on a non-qualified distribution (discussed in Part III): A non-qualified distribution imposes a tax on the distribution, but the early withdrawal penalty will be imposed in addition to the tax. Example #1: Jim, age 30, makes a Roth IRA contribution of $2,000 in 1998. In year 2005, Jim's Roth IRA has a balance of $3,500. Jim decides to close his Roth IRA in a non-qualified distribution in year 2005. Since the distribution is non-qualified, Jim will owe taxes on his Roth earnings of $1,500, and will pay tax on this amount at his marginal tax rate. In addition, since the distribution took place before Jim reached age 59 ½, and since Jim did not meet any of the exceptions, Jim will also be assessed a 10% early withdrawal penalty on the earnings. If we assume that Jim is in the 28% marginal tax bracket, he will pay $420 in tax on the earnings, and will pay a penalty in the amount of $150 on the early distribution. This could be a very steep price to pay.Besides, I would think that while daytrading in general is not a very Foolish thing to do, daytrading within an IRA is even more so.
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