Move securities to Roth Account

7 Dec 2009 by Chetan Shah.

If you have securities for which you are losing money and do not want to part with it then one way of avoiding future tax payment is to transfer the securities over to a Roth IRA account that way when in future it is making money, you will not be taxed on profit the security returns. In addition you will be able to claim the loss now as part of your current year tax filing.

For example : If you bought a stock of ABC company at $15 and now it is trading at $10 but you do not want to part with it, then a strategy could be to sell the ABC stock at $10 and claim tax deduction (if you have held it for more than a year) for loss ($500 loss if you have 100 shares) and after 30 days buy the same stock in your Roth IRA account.

The advantage of doing so will be :

1. You get a tax deduction now because of the loss you had by selling it.

2. You will not be required to pay on the profits you make in future.

With the income caps going away in 2010, opening a Roth IRA account should be even more easier.

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