WHEN DO THE PROFITS ON MY ROTH IRA INVESTMENTS BECOME TAXABLE?

Will I embrace the matter from my monetary confidant for taxation purposes during the finish of the year? (Sorry, brand new to this).

{ 5 comments… read them below or add one }

B October 25, 2010 at 6:06 am

NEVER,

Your Roth Ira can be taken tax free after 591/2 and you will never be taxes on those monies unless you withdraw it out early. Then it is a 10% penalty AND ordinary income.

phipsi32 October 25, 2010 at 6:19 am

Generally, no. You already paid taxes on the money in your Roth IRA, so you get to keep whatever you make (or lose). Your broker or money manager will not issue a 1099 on qualified accounts like a Roth IRA. They will, however, report contributions and distributions to the IRS. So make sure your eligible before you add or withdraw money from your account.

There is one exception to this rule. If you own a Master Limited Partnership (MLP), some of your dividends may be taxable even within a qualified account like a Roth IRA. Tax rules are different for MLPs, but this won’t be a problem unless you have large holdings in MLPs. Check with your accountant regarding tax liabilities and MLP ownership.

Thor October 25, 2010 at 6:55 am

They don’t, unless they are withdrawn early.

edit-Ratings were right I missed this was a Roth. mea culpa

Kevin S October 25, 2010 at 7:33 am

rothira.com
http://www.stockmarketresources.blogspot.com

The first answer was correct. No profits are taxable unless you withdraw them before age 59.5. Even during this period, you are still allowed to withdraw the total of your contributions without any tax penalty. If you withdraw more, then you have to pay both income tax and a 10% penalty on it. The links above are good resources. Rothira.com is the official Roth IRA website, and the other has some good IRA information links for you to get up to speed. Good luck!

jebediabartlett October 25, 2010 at 8:15 am

Capital N…capital E…capitalV ..capital E ..capital R
The KEMP-ROTH bill that created the ROTH IRA is probably the greatest piece of legislation ever created for the hard-working, saving, investing, over-taxed average American citizen. With the perseverance to always max your IRA yearly, some knowledgeable investing and some luck, a TAX-FREE nest egg in the 3 mil neighborhood could be waiting !!
… and if you leave it IN the IRA it continues to make money, tax-free, even as you start withdrawing at 60…and could easily be making MORE money than you are withdrawing…and the amount you could withdraw is probably 3 times the average Social Security check ( and that gov program will be broke most likely, anyway)

Over and over and over I will tell anyone that asks about a ROTH…get in now ! max every year! ..and get ” aggressive ” investments for the first few years to reeeeaalllyyy get the snowball started.

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