Roth IRAs and RMDs: Today's Slott Report Mailbag | Ed Slott and Company, LLC

Roth IRAs and RMDs: Today's Slott Report Mailbag

By Beverly DeVeny
IRA Analyst
Follow Us on Twitter: @theslottreport



Question:

I am 64 and opened my only Roth IRA over 5 yrs ago. I originally contributed $32.5K ($6.5K for 5 yrs) to this Roth IRA but now find it at $22.5K in value.

Can I close this account and take a $10K capital loss?

Kaptain Kurt


Answer:

The option to deduct losses in an IRA or Roth IRA is no longer available. Before the Tax Cuts and Jobs Act was passed, you could deduct losses as miscellaneous itemized deductions subject to a 2% floor. However, that deduction was eliminated beginning January 1, 2018. Additionally, investment losses in an IRA or retirement plan are not eligible for capital loss treatment. Thus, you cannot deduct the loss under those rules either.


Question:

I am required to take  my first RMD this year.  Could I do it by converting that amount  to Roth to satisfy the requirement?  If so, do I have to do the conversion by 12-31 this year, or 4-15 next year? 

Thank you.


Answer:

The key word in required minimum distributions (RMDs) is the word “required.” The RMD funds cannot remain or return to any retirement account once they are distributed. In addition, a Roth conversion is treated as a rollover for tax reporting purposes and an RMD cannot be rolled over. When you have an RMD that is due, you generally have two options: (1) take the amount into income; or (2) donate it to a charity using the qualified charitable distribution rules. The second option allows you to exclude the RMD from your taxable income but is only available to RMDs from IRAs.  

 

 


Posted in:

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to matt@irahelp.com for approval.

For white papers/other outflow pieces:
Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC - depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:
Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:
Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at matt@irahelp.com or (516) 536-8282 with any questions.

 

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.
 

I agree to the terms and services:

You may review the terms and conditions here.