I have a Roth IRA with Buyandhold.com, and would like to shift a position. I want to sell my shares of one company's stock, and then reinvest that money in a different company. When the shares are sold, the money will be kept in a MM account until I submit a buy order.So my question is: As long as the MM account is within the IRA, can I sell the stock without incurring a tax penalty as long as I don't withdraw the money and use it to purchase stock within the same IRA account? I asked the people at BAH, but they wouldn't give me a straight answer (I'm sure they're just being careful about incurring liability for giving tax advice when they are not licensed to do taxes). Any help will be appreciated.
All transactions within the IRA account are generally tax free as long as the money remains in the account. So yes, you can trade stocks, invest temporarily in money markets or mutual funds, freely with no tax impact. The taxes are due only when the money comes out of the account (in the case of a traditonal IRA or 401K, but only as penalty distributions in the case of a Roth).The ability to trade securities freely is the main advantage of an IRA account compared to LTBH.
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