Taxes in Roth IRA investment losses and profit
Will appreciate if somebody can explain/instruct how the losses and/or profits are taxed on invested Roth IRA.
I.e. can (or, how) loss be deducted in case I invested my Roth IRA money in stocks, ETFs, mutual funds?
And how it will be taxed in case I got a profit from my Roth IRA invested in stocks, ETFs, mutual funds?
Thnks in advance
Permalink Submitted by Alan - IRA critic on Sun, 2020-05-03 02:41
Once your Roth IRA is qualified (5 years and age 59.5), all gains are tax free in addition to your contributions. But losses in your Roth cannot be claimed because misc itemized deductions subject to the 2% floor were suspended starting in 2018. Even before 2018, no loss could be claimed until all your Roth IRAs were completely closed.
Permalink Submitted by Steven Pelletier on Tue, 2023-01-31 21:21
Does “completely closed” mean totally distributed? Or could I have recognized/deducted losses if I transferred the entire Roth balance from, say, an equity based account to an annuity?
Permalink Submitted by Alan - IRA critic on Tue, 2023-01-31 21:40
It means all Roth accounts are fully distributed. However, as indicated above no loss can be claimed even when fully distributed at a loss since 2018. The deduction could be effective again in 2026 when the current tax provisions sunset, but I would not bet on it.