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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 123479  
Subject: Re: Roth IRA Taxes Date: 9/30/1997 10:31 AM
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<<If I follow the FF model in a new Roth IRA, do I have to pay taxes on the profits when I rebalance my holdings every 18 months even if I don't take the money out of the IRA?>> sure don't, Dave.

One of the wonderful things about investing in an IRA account (either regular or Roth), is that the transactions within the IRA are really meaningless. Long term gains, short term gains, interest, dividends, etc. are all meaningless within an IRA. Earnings is earnings...period.

You will pay taxes on a regular IRA when the funds are withdrawn and distributed to you. In a Roth IRA, you'll be able to receive tax free (assuming that you meet all of the qualifications) your distributions in the future. And even if you pull your Roth IRA out early, only the distributions will be subject to tax.

So how that $100 grows to $1,000 within the IRA is meaningless. Makes your recordkeeping very easy, and removes tax consequences from your investment decisions within your IRA.

TMF Taxes
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