Useful WebSites:
April 1999
July 2000
November 2000
December 2000
January 2001
February 2001
March 2001
April 2001
May 2001
June 2001
July 2001
August 2001
September 2001
October 2001
November 2001
December 2001
January 2002
February 2002
March 2002
April 2002
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
Taxing IRA Investments
Q:
Hi Kerry,Can sold IRA asset profits be treated as long term capital gains for tax accounting if they are kept over the required time?(6months?)I have sold quite a bit this year and would appreciate your advice.Thanks....
A:
This is an issue that catches a lot people by surprise. While sales of assets held for more than 12 months in your individual or living trust's name qualify for the special lower long term capital gains tax rates, that is not the case for gains made by investments inside IRA and other retirement accounts.
Conventional IRAs, where you claim a deduction for contributions made to the accounts, are tax deferred arrangements. When money is drawn out, and not rolled over into another retirement account, it is all subject to income tax as ordinary income regardless of how the money was invested inside the retirement account. Income generated from bonds or other interest bearing investments is taxed the same way as profits made from stock trades. So, keeping track of long term capital gains earned inside IRAs is not required for anything.
The other main kind of IRA, the non-deductible Roth, has the advantage of allowing completely tax free income from all of its investments, as long as the account has been held for at least five years. Just like with conventional IRAs, there is no need to keep track of what kinds of earnings were generated inside the IRA because they all receive the same tax treatment.
As you may have read on my blog on several occasions, I am still very skeptical of the long term tax free status of Roth IRAs. It is still my prediction that our rulers in DC will pull the same Switcheroo on Roths as they did with Social Security benefits, and force those they consider to be evil rich to pay tax on income receive from them. FYI: Evil rich for SS recipients is any single person earning over $25,000 or married couple earning over $32,000 per year.
I hope this answers your question.
Kerry
Labels: Retire
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 8/25/2007 12:11:00 PM Send this post:
