Taxes on Dividends in a Roth IRAWhat does Line 22 Basis in Roth IRA contributions mean in Form 8606?Should I take contributions out of my Roth IRA to live off of?Roth IRA contributions and Roth 401(k) rolloverIs a Roth IRA preferable to a Traditional IRA?US Taxes: How does the foreign earned income exclusion affect Roth IRA contribution limits?Using a Roth conversion ladder in a 401(k) while also retaining backdoor Roth IRA conversionsExcess Roth IRA contributions and taxesInvestment of Roth IRA Gains and 5-Year MinimumTaxes on Roth IRA earnings withdrawals <59.5 but >5 yearsRoth 401(k) compared to Roth IRACan I place a stock in an IRA temporarily to capture a dividend, then move it back?
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Taxes on Dividends in a Roth IRA
What does Line 22 Basis in Roth IRA contributions mean in Form 8606?Should I take contributions out of my Roth IRA to live off of?Roth IRA contributions and Roth 401(k) rolloverIs a Roth IRA preferable to a Traditional IRA?US Taxes: How does the foreign earned income exclusion affect Roth IRA contribution limits?Using a Roth conversion ladder in a 401(k) while also retaining backdoor Roth IRA conversionsExcess Roth IRA contributions and taxesInvestment of Roth IRA Gains and 5-Year MinimumTaxes on Roth IRA earnings withdrawals <59.5 but >5 yearsRoth 401(k) compared to Roth IRACan I place a stock in an IRA temporarily to capture a dividend, then move it back?
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty,.everyoneloves__bot-mid-leaderboard:empty margin-bottom:0;
Do I have to pay taxes on dividends that I receive from stocks in my Roth IRA? I'm aware that I won't pay taxes on my money if I take it out after age 59.5 or if I take out less than or equal to the principal amount. Does this mean I can cash dividend checks and use this cash to make purchases from my Roth IRA without any taxes? Thanks in advance.
united-states taxes roth-ira dividends
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
add a comment |
Do I have to pay taxes on dividends that I receive from stocks in my Roth IRA? I'm aware that I won't pay taxes on my money if I take it out after age 59.5 or if I take out less than or equal to the principal amount. Does this mean I can cash dividend checks and use this cash to make purchases from my Roth IRA without any taxes? Thanks in advance.
united-states taxes roth-ira dividends
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23
add a comment |
Do I have to pay taxes on dividends that I receive from stocks in my Roth IRA? I'm aware that I won't pay taxes on my money if I take it out after age 59.5 or if I take out less than or equal to the principal amount. Does this mean I can cash dividend checks and use this cash to make purchases from my Roth IRA without any taxes? Thanks in advance.
united-states taxes roth-ira dividends
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
Do I have to pay taxes on dividends that I receive from stocks in my Roth IRA? I'm aware that I won't pay taxes on my money if I take it out after age 59.5 or if I take out less than or equal to the principal amount. Does this mean I can cash dividend checks and use this cash to make purchases from my Roth IRA without any taxes? Thanks in advance.
united-states taxes roth-ira dividends
united-states taxes roth-ira dividends
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
edited Mar 22 at 15:24
JoeTaxpayer♦
147k23236475
147k23236475
asked Mar 21 at 19:49
user780483user780483
1291
asked Mar 21 at 19:49
user780483user780483
1291
asked Mar 21 at 19:49
user780483user780483
1291
1291
@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23
add a comment |
@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23
@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23
@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23
add a comment |
2 Answers
2
active
oldest
votes
The dividends from assets within an IRA are still owned by the IRA. A dividend "check", if sent to you, is considered a distribution of funds. More important, it simply shouldn't happen. The dividend stays in the IRA, and if not automatically reinvested in additions shares, is available as funds to invest in another stock or other investment within the IRA.
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
|
show 3 more comments
By law, any distributions that you take from a Roth IRA are deemed have first come from your contributions and then from your accumulated earnings on those contributions. "But, but," you splutter, "I specifically instructed the IRA custodian to sell only those shares from my mutual fund that were purchased with dividends and to send me the cash from those. So I did withdraw the dividends and leave the contributions still in the Roth IRA! So there!" Bzzzt! Thanks for playing. What you told the IRA custodian to do is irrelevant because you can only deposit cash into an IRA and get back only cash from it, and the cash that you got out is deemed to be a withdrawal of contributions first (in the order that they went in), and only if the withdrawal exceeds the total contributions that you made are you deemed to have withdrawn some of the dividends. The latter part can incur a penalty for early withdrawal. Withdrawal of contributions is tax-free and penalty-free.
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
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2 Answers
2
active
oldest
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2 Answers
2
active
oldest
votes
active
oldest
votes
active
oldest
votes
The dividends from assets within an IRA are still owned by the IRA. A dividend "check", if sent to you, is considered a distribution of funds. More important, it simply shouldn't happen. The dividend stays in the IRA, and if not automatically reinvested in additions shares, is available as funds to invest in another stock or other investment within the IRA.
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
|
show 3 more comments
The dividends from assets within an IRA are still owned by the IRA. A dividend "check", if sent to you, is considered a distribution of funds. More important, it simply shouldn't happen. The dividend stays in the IRA, and if not automatically reinvested in additions shares, is available as funds to invest in another stock or other investment within the IRA.
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
|
show 3 more comments
The dividends from assets within an IRA are still owned by the IRA. A dividend "check", if sent to you, is considered a distribution of funds. More important, it simply shouldn't happen. The dividend stays in the IRA, and if not automatically reinvested in additions shares, is available as funds to invest in another stock or other investment within the IRA.
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
The dividends from assets within an IRA are still owned by the IRA. A dividend "check", if sent to you, is considered a distribution of funds. More important, it simply shouldn't happen. The dividend stays in the IRA, and if not automatically reinvested in additions shares, is available as funds to invest in another stock or other investment within the IRA.
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
answered Mar 21 at 19:55
JoeTaxpayer♦JoeTaxpayer
147k23236475
147k23236475
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
|
show 3 more comments
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
Thanks. So if I set up my Roth IRA so that the dividends are held in the IRA, can I then withdraw them tax free up to the amount of the principle?
– user780483
Mar 21 at 20:00
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
The accumulated dividends are part of the account. You can always withdraw up to your original deposit. Dividends are not a 'deposit'. I hope that's clear.
– JoeTaxpayer♦
Mar 21 at 20:03
4
4
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
You deposited $10K. Some time later, it's worth $20K. You can withdraw $10K any time. The withdrawn $10K can be from sales proceeds, dividends, or interest over the years. You don't need to identify specific dollars, only be ware of the limit.
– JoeTaxpayer♦
Mar 21 at 20:21
1
1
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
@user780483, you also seem to be misunderstanding the entire point of a Roth IRA, which is that you pay taxes on the money before you make your initial contributions, and then you don't pay taxes on distributions after 59.5. You can take out the amount you contributed at any time, even before the retirement minimum, but you are limited in your contributions.
– chrylis
Mar 21 at 22:43
2
2
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
@chrylis+Joe nit: you can take out without tax&penalty contributions and converted-from-trad amounts regardless of 59.5 but only after the Roth has been open 5 years. Related money.stackexchange.com/questions/74763/… (mine)
– dave_thompson_085
Mar 22 at 14:09
|
show 3 more comments
By law, any distributions that you take from a Roth IRA are deemed have first come from your contributions and then from your accumulated earnings on those contributions. "But, but," you splutter, "I specifically instructed the IRA custodian to sell only those shares from my mutual fund that were purchased with dividends and to send me the cash from those. So I did withdraw the dividends and leave the contributions still in the Roth IRA! So there!" Bzzzt! Thanks for playing. What you told the IRA custodian to do is irrelevant because you can only deposit cash into an IRA and get back only cash from it, and the cash that you got out is deemed to be a withdrawal of contributions first (in the order that they went in), and only if the withdrawal exceeds the total contributions that you made are you deemed to have withdrawn some of the dividends. The latter part can incur a penalty for early withdrawal. Withdrawal of contributions is tax-free and penalty-free.
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
add a comment |
By law, any distributions that you take from a Roth IRA are deemed have first come from your contributions and then from your accumulated earnings on those contributions. "But, but," you splutter, "I specifically instructed the IRA custodian to sell only those shares from my mutual fund that were purchased with dividends and to send me the cash from those. So I did withdraw the dividends and leave the contributions still in the Roth IRA! So there!" Bzzzt! Thanks for playing. What you told the IRA custodian to do is irrelevant because you can only deposit cash into an IRA and get back only cash from it, and the cash that you got out is deemed to be a withdrawal of contributions first (in the order that they went in), and only if the withdrawal exceeds the total contributions that you made are you deemed to have withdrawn some of the dividends. The latter part can incur a penalty for early withdrawal. Withdrawal of contributions is tax-free and penalty-free.
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
add a comment |
By law, any distributions that you take from a Roth IRA are deemed have first come from your contributions and then from your accumulated earnings on those contributions. "But, but," you splutter, "I specifically instructed the IRA custodian to sell only those shares from my mutual fund that were purchased with dividends and to send me the cash from those. So I did withdraw the dividends and leave the contributions still in the Roth IRA! So there!" Bzzzt! Thanks for playing. What you told the IRA custodian to do is irrelevant because you can only deposit cash into an IRA and get back only cash from it, and the cash that you got out is deemed to be a withdrawal of contributions first (in the order that they went in), and only if the withdrawal exceeds the total contributions that you made are you deemed to have withdrawn some of the dividends. The latter part can incur a penalty for early withdrawal. Withdrawal of contributions is tax-free and penalty-free.
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
By law, any distributions that you take from a Roth IRA are deemed have first come from your contributions and then from your accumulated earnings on those contributions. "But, but," you splutter, "I specifically instructed the IRA custodian to sell only those shares from my mutual fund that were purchased with dividends and to send me the cash from those. So I did withdraw the dividends and leave the contributions still in the Roth IRA! So there!" Bzzzt! Thanks for playing. What you told the IRA custodian to do is irrelevant because you can only deposit cash into an IRA and get back only cash from it, and the cash that you got out is deemed to be a withdrawal of contributions first (in the order that they went in), and only if the withdrawal exceeds the total contributions that you made are you deemed to have withdrawn some of the dividends. The latter part can incur a penalty for early withdrawal. Withdrawal of contributions is tax-free and penalty-free.
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
edited Mar 21 at 20:56
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
answered Mar 21 at 20:45
Dilip SarwateDilip Sarwate
24.7k33596
24.7k33596
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
add a comment |
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
"get back only cash from it" - Wait, what? I had an inherited IRA, in which I bought Apple at $5 quite a few splits ago. I took the distribution "in-kind" and paid tax on the withdrawal, but no need to sell or repurchase the shares. Deposits? Cash only. Distributions, in-kind is ok.
– JoeTaxpayer♦
Mar 21 at 20:58
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
@JoeTaxpayer For simplicity, I did not drag in the in-kind distribution into my answer but for the record, you must have paid taxes based on the closing price of the shares on the day that they were distributed to you. It is as though the custodian sold the shares at the closing price and gave you the cash, and you promptly re-bought the same shares at the closing price, all without anyone having to pay brokerage fees for the implicit selling and buying. So yeah, add in the complication if you wish.
– Dilip Sarwate
Mar 21 at 21:07
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
For purposes of this question, understood. I was reflecting back to other questions that talked about RMDs as messing up one's allocation, and required far more thought than is really needed. But, yes (and +1) for the answer.
– JoeTaxpayer♦
Mar 21 at 21:53
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protected by JoeTaxpayer♦ Mar 22 at 0:36
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@dave_thompson_085 - indeed, I'll edit. And a reminder that (paying down) principal is your pal in the journey of good finances. And 'loose' rhymes with 'moose'. (I'll delete this shortly.)
– JoeTaxpayer♦
Mar 22 at 15:23