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Author: mjglover Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Roth/Stocks Date: 1/21/1999 1:31 PM
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I just read "You Have More Than You Think," and I have questions about the Foolish Four. You say hold the 4 stocks for 18 months due to tax implications but what if you have these 4 stocks in a Roth account ---how long should you hold them before you review and determine if you should keep these stocks or invest in different stocks? Can you turn stocks in the account without tax implications?
spicyg

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Author: gp703 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7949 of 74759
Subject: Re: Roth/Stocks Date: 1/21/1999 1:38 PM
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One of the beauties of the various IRAs is you don't have to worry about any intermediate taxes on gains and/or dividends. With the Roth, you just pay tax on the difference between what you put in versus what you take out. The good news is that gains are not taxed as capital gains per se; however, the bad news is you canot deduct losses from sales of stocks.

GP

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Author: keeneinvestor One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7950 of 74759
Subject: Re: Roth/Stocks Date: 1/21/1999 1:44 PM
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I just read "You Have More Than You Think," and I have questions about the Foolish Four. You
say hold the 4 stocks for 18 months due to tax implications but what if you have these 4 stocks in a
Roth account ---how long should you hold them before you review and determine if you should
keep these stocks or invest in different stocks? Can you turn stocks in the account without tax
implications?


The 18 month rule has changed due to changes in the tax code. The tax code now says 12 months. The book "Motley Fool Investment Guide" said 12 months instead of 18 months, and most of the backward calculations have been based on 12 months, so I use 12 months in my 401k (which could be equated to the Roth IRA in your situation).

keeneinvestor

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Author: FoolinUpNorth One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7954 of 74759
Subject: Re: Roth/Stocks Date: 1/21/1999 3:05 PM
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gp703 wrote:
One of the beauties of the various IRAs is you don't have to worry about any intermediate
taxes on gains and/or dividends. With the Roth, you just pay tax on the difference between
what you put in versus what you take out. The good news is that gains are not taxed as
capital gains per se; however, the bad news is you canot deduct losses from sales of stocks.


To which I reply:

Unless I'm mistaken, and of course, THAT never happens ;^), the beauty of the Roth is that you've ALREADY paid the taxes, as it is funded w/ after-tax dollars. So you don't "just pay tax on the difference between what you put in versus what you take out" - whatever you take out (contributions OR gains) are removed tax free. This, of course, assumes you're not removing anything "early".

Tim


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Author: gp703 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7957 of 74759
Subject: Re: Roth/Stocks Date: 1/21/1999 4:29 PM
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Tim,

You are right as I picked the wrong one. Maybe I'll whip myself with my next Roth statement. I meant regular IRA there.

GP aka chastized one

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7983 of 74759
Subject: Re: Roth/Stocks Date: 1/22/1999 1:54 PM
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Greetings, Spicyg, and welcome. You asked:

<<I just read "You Have More Than You Think," and I have questions about the Foolish Four. You say hold the 4 stocks for 18 months due to tax implications but what if you have these 4 stocks in a Roth account ---how long should you hold them before you review and determine if you should keep these stocks or invest in different stocks? Can you turn stocks in the account without tax implications?>>

Within a Roth IRA, there are no tax implications on gains. The holding period of 18 months was for folks using taxable accounts so as to allow them to receive favorable long-term capital gains rates on sales of shares. Also, since the book was published, the law was changed again to allow a long-term capital gains rate to be used for shares held longer than 12 months instead of 18. Thus, in either the Roth or the taxable account you may use a 12-month anniversary date for the Foolish Four should you prefer. Actually, it's 12 months plus one day for the taxable account.

Regards….Pixy



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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7987 of 74759
Subject: Re: Roth/Stocks Date: 1/22/1999 1:57 PM
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GP sez:

<< Maybe I'll whip myself with my next Roth statement. I meant regular IRA there.

GP aka chastized one>>


Nope, sorry. No self-berating is allowed on this board until you make as many mistakes as your Foolish host. And for that to happen, friend, you have a v-e-r-y long way to go.

Regards….Pixy


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