Permalink Submitted by Alan - IRA critic on Fri, 2021-10-22 21:32
If the trading is done within the Roth, there is nothing to add. If it is done in a Traditional IRA, any gains can be converted to Roth, but will be taxed upon conversion. If the trading is done in a taxable account, the securities must be sold and cap gains taxes paid if that money is to fund a regular Roth contribution, as all such contributions must be made in cash.
Permalink Submitted by a. B. on Fri, 2021-10-22 21:52
thank you Alan-iracritic for your reply. I have been told that day trading, especially products like futures where trading, in some instances a few times a day, isn’t allowed within Roth Ira .
Permalink Submitted by a. B. on Sat, 2021-10-23 14:52
“if the trading is done in a taxable account, the securities must be sold and cap gains taxes paid if that money is to fund a regular Roth contribution, as all such contributions must be made in cash”Is there a maximum contibution allowed in this example? thanks again for your replies
Permalink Submitted by Alan - IRA critic on Sat, 2021-10-23 15:56
The max Roth contribution for a year is 6k (7k if 50+). You also must have earned income at least equal to your contribution and there is an upper total income as well. The upper income limit after which contributions begin to be phased out is 125k modified AGI if single, 198k if filing jointly.
Permalink Submitted by Alan - IRA critic on Fri, 2021-10-22 22:49
Certain types of trades are not allowed in IRA per IRS rules. Other types are allowed (eg day trading) but not by all custodians. Any short selling or naked puts or calls are never allowed because you might have to come up with cash in excess of the contribution limit. LIkewise, margin trading or any kind of loan is not allowed since IRAs cannot provide loans. Following is an article on what is and is not allowed, but your custodian may not offer everything the IRS allows. Top 15 Questions about Trading in an IRA | Six Figure Investing
Permalink Submitted by Alan - IRA critic on Fri, 2021-10-22 21:32
If the trading is done within the Roth, there is nothing to add. If it is done in a Traditional IRA, any gains can be converted to Roth, but will be taxed upon conversion. If the trading is done in a taxable account, the securities must be sold and cap gains taxes paid if that money is to fund a regular Roth contribution, as all such contributions must be made in cash.
Permalink Submitted by a. B. on Fri, 2021-10-22 21:52
thank you Alan-iracritic for your reply. I have been told that day trading, especially products like futures where trading, in some instances a few times a day, isn’t allowed within Roth Ira .
Permalink Submitted by a. B. on Sat, 2021-10-23 14:52
“if the trading is done in a taxable account, the securities must be sold and cap gains taxes paid if that money is to fund a regular Roth contribution, as all such contributions must be made in cash”Is there a maximum contibution allowed in this example? thanks again for your replies
Permalink Submitted by Alan - IRA critic on Sat, 2021-10-23 15:56
The max Roth contribution for a year is 6k (7k if 50+). You also must have earned income at least equal to your contribution and there is an upper total income as well. The upper income limit after which contributions begin to be phased out is 125k modified AGI if single, 198k if filing jointly.
Permalink Submitted by Alan - IRA critic on Fri, 2021-10-22 22:49
Certain types of trades are not allowed in IRA per IRS rules. Other types are allowed (eg day trading) but not by all custodians. Any short selling or naked puts or calls are never allowed because you might have to come up with cash in excess of the contribution limit. LIkewise, margin trading or any kind of loan is not allowed since IRAs cannot provide loans. Following is an article on what is and is not allowed, but your custodian may not offer everything the IRS allows.
Top 15 Questions about Trading in an IRA | Six Figure Investing