Can one day-trade in a Roth to avoid taxes??? I know that in some cases you have to wait for the money to clear, but, are there any Roth regulations?
There are no tax liablities for qualified distributions from a ROTH.buzman
Okay buzman, but that's not what he asked.Yes, there will be no tax consequences for actions in a Roth. Of course, that's only part of your cost as day trading has substantial commissions as well, which you will still pay. And its a darn good question as to whether you should be doing it in the first place.Eliminating the speed limit doesn't make it *safe* to go 90 down a dirt road. Tread with care, if at all.Also, on the flip side, you can't deduct losses. So if you're bad at it, it won't get you any money back.
To add to Delta's response, there are also limitations on how much you can contribute to a Roth account in any one year ($4000 for 2006, $5000 if over 50), as well as some restrictions on what is used to fund the Roth account i.e earned income.Hohum
I know. I am wondering if there are regulations about how often the same stock can be bought and sold, say in a week?
Yes there would defintely be some commisions piling up. Still, I am looking to see if anyone knows of a regulation guiding the amount of trading in a single stock, inside a Roth. Also, thanks for the advice.
There are no regulations. You can pile up commissions to your broker's heart's delight.
There are no regulations. You can pile up commissions to your broker's heart's delight.Just a reminder. The commissions must be paid from the assets inside the Roth.
From the messages I occasionally get, ther are some restrictions on utilizing unsettled funds. I think this pops up if you buy one stock and then sell it that same day. It creates the possibility of using the funds from the sale to buy the stock for the sale. It can lock your account for 90 days. If you're buying and then selling on another day (say 2-3+ days later), you should have no problems. BTW, doing this isn't day trading, it's short-term trading, which I do in my IRA account.Calvin
I am wondering if there are regulations about how often the same stock can be bought and sold, say in a week? Waiting for the money to clear limits how often you can sell and buy in a week. Let's say the IRA*** is fully invested. In order to buy XYZ, you sell stock ABC. Some brokers would let you buy XYZ with the unsettled funds from ABC. However, if you sell XYZ before the ABC sale settles, they may freeze your account for 90 days. I get a warning from the broker before I make a purchase with unsettled funds. Don't know if the broker would give me a warning if I try to sell or just freeze my account after the sale. In any case, you have to hold anything that you buy with unsettled funds for at least 3 days.*** This applies to cash accounts: regular brokerage accounts and Traditional or Roth IRAs.- zol
Thanks. I wasn't sure about how long I had to wait to spend the money again. But I'll need to hang on to what I buy longer. Thanks for your answer.
Cool. This sounds like what I had in mind. I had a gain of 70,000 in my 401k a year ago before restrictions were enacted to prevent short-term trading. I traded in and out a couple times a week. So if I can do it in the Roth without using 401k funds I'll be doing it right. It was stressful to screw with retirement funds even if I was gaining. Thanks for posting.
Wait wait, are you talking *funds*? If so, most funds probably charge short term redemption fees if you sell out within 90 days or so, because the activity is very disruptive to their business. Even if they don't have explicit fees, they may have policies against it, and may restrict you from buying again if you do it too much. If you are talking about funds, make sure to read the prospectuses first so you know if you're gonna be hit with fees or otherwise blocked.
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