I have some money in a regular TD Ameritrade brokerage account, as well as some in my TD Ameritrade Roth IRA. For 2016, should I move the money from the regular brokerage account into my TD Ameritrade Roth IRA? Or leave it in the regular brokerage account? The 2016 contribution limit is 5500 I believe, and just want to know if there's any tax advantages down the line to moving it over from regular brokerage to Roth. Will they tax the regular brokerage eventually when I withdraw it?
Roth IRA question
- Thread starter JayDogSmooth
- Start date
The first question is how fast will you need the money. If the answer is soon, don't bother. If you can hold it in the Roth, then the income derived from you investment is tax free. If you have to sell stocks in your regular account you have to pay tax on any capital gain recognized. Othewise it's not a taxable event.
If you move the money over from your regular IRA to the Roth IRA, you will pay taxes for the transfer.
I think he's talking about moving from "his regular brokerage account" to the Roth. If he's talking about a regular IRA you're right.
No Roth-specific tax implications, aside from any taxes you'd be paying on however you're freeing up that money if it's not just sitting as cash. In theory, the money in your brokerage account is already after-tax, so you're using after-tax money to fund your Roth so you're in the clear.
And obviously make sure you qualify for the Roth under the income limits.
And obviously make sure you qualify for the Roth under the income limits.
Here are the tax implications:
1. Money in a regular brokerage account is post-tax money, so you've already paid taxes on it.
2. You will pay taxes on investments in the regular brokerage account every time they generate income, be it dividend income or capital gains from sales (either long or short term)
3. Money put into a Roth account must be post-tax money.
4. You will never pay taxes again on the money in a Roth (unless the US tax code changes), either when it generates income or when you withdraw it after retirement.
5. However, withdrawing the money early will be subject to significant penalties.
Even if you do not qualify for a Roth, you can contribute to a traditional non-deductible IRA and then immediately roll it over to a Roth. This can have other tax implications if you have existing deductible IRAs, so you might want to consult with a tax professional before doing this.
1. Money in a regular brokerage account is post-tax money, so you've already paid taxes on it.
2. You will pay taxes on investments in the regular brokerage account every time they generate income, be it dividend income or capital gains from sales (either long or short term)
3. Money put into a Roth account must be post-tax money.
4. You will never pay taxes again on the money in a Roth (unless the US tax code changes), either when it generates income or when you withdraw it after retirement.
5. However, withdrawing the money early will be subject to significant penalties.
Even if you do not qualify for a Roth, you can contribute to a traditional non-deductible IRA and then immediately roll it over to a Roth. This can have other tax implications if you have existing deductible IRAs, so you might want to consult with a tax professional before doing this.
$116,000 is the cap for single, or $183,000 for married couples. You can still open them but you can't fully contribute.
For a Roth you can take out what you original deposited tax-free. Any gains/dividends would be taxed if you take out before the distribution age (around 60).
https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
I understand the basic mechanics but honestly I've gotten confused by some of the more nuanced aspects many times which made me gun shy. I'm sure I can have a pro walk me through it for a price.
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