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I've just opened a self-directed IRA (rolled money from a previous employer's 401K plan). I have a question about capital gains.

Are capital gains an issue at all in an IRA? Or is everything just taxed as ordinary income once I retire and begin withdrawls?

I'm doing a Foolish Four with the money - I'm wondering if it really matters if I wait the full one year or if I trade the stocks prior to that time.

Thanks!

--Frank Condron
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Greetings, Frank, and welcome. You asked:

Are capital gains an issue at all in an IRA? Or is everything just taxed as ordinary income once I retire and begin withdrawls?

I'm doing a Foolish Four with the money - I'm wondering if it really matters if I wait the full one year or if I trade the stocks prior to that time.


No, capital gains are not an issue within an IRA. In a tradtional IRA, when you begin withdrawals all previously untaxed money (i.e., deductible contributions and all earnings) will be taxed at the ordinary income tax rates in effect at the time of the withdrawal.

All of the Dow strategies to include the Foolish Four are based on a 12- or an 18-month holding period, whichever you prefer. To alter that strategy (particularly the 12-month holding period) means you will be trading instead of practising the buy-and-hold discipline called for by that strategy. That approach might work, but more probably it will not. The time periods involved have been back-tested to 1961 Shorter holding periods have not, so who knows what the statistics would reveal for them? IMHO, if you're going to use a strategy, use it in full to achieve the expected results.

Regards....Pixy
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>To alter that strategy (particularly the 12-month >holding period) means you will be trading instead of >practising the buy-and-hold discipline called for by >that strategy.

Oh, believe me, I don't intend to alter the strategy. I was just curious about the tax implications. Besides, now I know that if I'm on vacation or business during the week when my 1 year period ends, there's now issue if I readjust the Fool Four holdings a few days earlier.

Thanks,
--Frank Condron
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Besides, now I know that if I'm on vacation or business during the week when my 1 year period ends,
there's now issue if I readjust the Fool Four holdings a few days earlier.


You might want to make it a couple of days AFTER to take advantage of long-term capital gains.

Bob
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>You might want to make it a couple of days AFTER to take advantage of long-term capital gains.

i thought we just established that long-term/short-term doesn't matter in an IRA...

--Frank Condron
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Oops! Your right.
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