What's the tax rate for trades I make in my IRA?
Answers
788 points
DaveDiggz answered one year ago …
Hey Rob,
IRAs are great...the thing to remember is, if you're in a traditional IRA you don't get a tax break, the taxes are just deferred until you begin withdrawing money. That is unless you have a Roth IRA, in which case, it's tax free. But the benefit in sticking with a traditional IRA is that you can deduct current contributions from your income taxes for that year.
It's all about incentivizing people to save for retirement -- not get one over on the IRS by day trading in it :)
-Dave
2769 points
Oldman answered one year ago …
Dave's answer is almost complete:
you will pay a marginal tax rate on all withdrawals from an IRA, except no tax on withdrawals from a Roth. This statement is further 'qualified' to mean that the withdrawals are all qualified per the tax code.
If you are successful at investing in a tax-sheltered account, eventually you will pay taxes.
896 points
jillybeansisme answered one year ago …
Just a little clarification is needed. You can contribute to an IRA; however, if you qualify for a 401K through your employer, you may not deduct the contributions from your gross income. Those contributions will be after tax dollars. You also must track those contributions, if they are put into a traditional IRA, because those will be the first withdrawals made once you begin withdrawing from that IRA. Those withdrawals will be tax exempt up to the amount contributed.
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jillybeansisme answered one year ago …
Oh, and to answer the actual question of what is the tax rate for trades in your IRA. They are not taxed. Only the amount withdrawn at the time of withdrawal is taxed at that current rate of taxation for your tax bracket at that time (after any above mentioned post-tax contributions were withdrawn).
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989 points
rvilmur answered one year ago …
There are no immediate tax consequences in an IRA. Taxes are paid at your regular rate when withdrawing funds if you are over 59 years old. jillybeansisme is wrong in saying that first withdrawals from a regular IRA that had Tax paid contributions will be credited first. The IRS is not that kind. If your taxed contributions are 10% of your total IRA value only 10% of your withdrawal is going to be tax free and 90% is at your regular rate. That proportioning is going to continue based on last years IRA total value until the IRA is exhausted.
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dustbusterz answered one year ago …
i think the question you are asking is, do you pay taxes (and how much) if you trade while your investments are inside your ira. you can trade stocks and other securities within your ira account as long as you do not take possession of these funds. and as long as you do not take possession of the funds , you will pay no taxes on the trades. it is after you retire and begin to withdraw the funds that you begin to incur the taxes, and this will very depending on the current tax rate at the time you begin withdraw also your current income levels will determine your tax rates at that time.
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jillybeansisme answered one year ago …
RVILMUR, perhaps my information is old, so thank you for correcting it. I could have been misinformed and regret giving misinformation if that is what I did. Again, thank you.
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mario answered one year ago …
If you're still a little fuzzy on the subject matter I highly recommend you buy the book "Go Roth" it will clear up every aspect of a traditional IRA Roth IRA Roth 401k 403B traditional 401k 403B and much much more. Just go to fairmark.com if your intrested
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