STOCK IN KIND TO A ROTH

Submitted by Edward Lustberg on Tue, 2008-07-01 19:16

Friend has a client that inherited stock. Should have a stepped-up basis from time of inheritance. Can taxpayer contribute the stock in kind to a Roth IRA?

If so, will there be any capital gains tax prior to contributing to roth?

Thanks,

Ed Lustberg



Submitted by Alan Spross on Tue, 2008-07-01 20:31

Ed,

No, all regular Roth contributions must be made in cash. Conversions can be done in kind and rollover contributions also, but since you mentioned a step up in basis, these shares are obviously not in a tax deferred account now.

Taxpayer would have to sell, report any gain or loss on Sch D and be eligible to make a regular contribution by having some earned income. This is the only way to get the value of the shares into an IRA.



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