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Author: naptym Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Roth IRA taxes Date: 1/1/2002 3:00 PM
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I understand that having a Roth IRA means that my withdrawls after a cerain age are tax free, but what about the buys/sells I make today? Do I have tax consequences on the trades I make today? Do I need to claim them on my taxes somewhere? Any feedback would sure save me some time...

Thanks!
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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56568 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 3:18 PM
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You need to let your tax preparer know how much you've contributed to your Roth for the year. Any moving of funds within your roth shouldn't make a difference -- BUT -- if you have switched funds between a roth and a traditional, there will be tax implications.

In otherwords, if you have a $5000 in a traditional IRA and you convert it to a Roth, then, since you didn't pay taxes on that money when you made the contribution, you will have to now.

Also, you have until April 15th of this year (or until the time you file your 2001 taxes) to make contributions to your roth for the year 2001. Just make sure to let your tax preparer know everything that you've done with regard to your retirement contributions.

Hope this helps. Happy New Year,
Caat

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56569 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 3:36 PM
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what about the buys/sells I make today? Do I have tax consequences on the trades I make today?

All trades that occur strictly inside your Roth IRA have absolutely no tax cosequences, whatsoever, just as long as money doesn't come out of the Roth IRA. There is nothing to claim on your taxes. (In fact, the regular contributions you make to your Roth IRA have no place to claim on your taxes, either!)

However, trading costs have to be paid from assets in the Roth IRA, so if you do a lot of trading, the trading costs could end up eroding the value of your Roth IRA. Custodial fees, on the other hand, may be paid from either the Roth IRA assets or from outside the Roth IRA, but some custodians might not be set up to accept payments from either source.


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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56571 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 3:46 PM
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You need to let your tax preparer know how much you've contributed to your Roth for the year.

Other than just as a double-check for eligibility (which I think is a good-enough reason), the tax preparer realy doesn't need to know--there is no place to declare Roth IRA contributions. (This is unlike non-deductable Tradtional IRA contributions where one needs to establish one's "tax basis".)

See IRS (http://www.irs.gov) Publication 590 (http://www.irs.gov/forms_pubs/pubs/p590toc.htm), specifically the introduction of Chapter 2 (http://www.irs.gov/forms_pubs/pubs/p59002in.htm) has this statement:

Contributions not reported. You do not have to report Roth IRA contributions on your return.

The Roth IRA custodian(s) is(are) responsible for notifying the IRS of Roth IRA contributions.


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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56578 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 6:14 PM
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Also, you have until April 15th of this year (or until the time you file your 2001 taxes) to make contributions to your roth for the year 2001.

Actually you have until 4/15/2002 regardless of when you file your 2001 return. There is no requirement that the contribution be made before the return is filed.

Phil Marti

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Author: ptheland 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: 56581 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 7:04 PM
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Other than just as a double-check for eligibility (which I think is a good-enough reason), the tax preparer realy doesn't need to know--there is no place to declare Roth IRA contributions.

Correct. But as a service to my clients, I like to keep track of Roth contributions. If someone wants to withdraw their contributions, it does need to be reported on the return, even if the withdrawl is not taxable. If I don't find out about the contributions yearly as we go along, I'll need to get the information at withdrawl time. Much easier to collect the data yearly than several years after the fact.

--Peter

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Author: bigcaat Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56594 of 121219
Subject: Re: Roth IRA taxes Date: 1/1/2002 9:17 PM
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Actually you have until 4/15/2002 regardless of when you file your 2001 return. There is no requirement that the contribution be made before the return is filed.

My mistake. Thanks for the clarification.

Happy New Year.
Caat

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