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Strategies & Market Trends : Picks of the quarter -- Ignore unavailable to you. Want to Upgrade?

To: Mike McFarland who wrote (1301)9/3/2006 1:45:04 AM
From: Elroy  Read Replies (1) | Respond to of 20435
 
It bothers me enough that my wife's
Roth has a basis (?!), I can't get my head around
that at all, and I certainly wont need to remember
that twenty years from now.

I thought a Roth was made up of post-tax contributions, so you don't need to pay taxes on whatever gains you have in 20 years. I've got a Roth (instead of a regular IRA), and the main reason I did that was to not have to calculate the cost basis.

Since gains are non-taxable why would you need to know the cost basis of a Roth, unless you withdraw early (and incur tax penalties)?



To: Mike McFarland who wrote (1301)9/3/2006 1:47:58 AM
From: Sr K  Read Replies (1) | Respond to of 20435
 
The basis in a Roth IRA is important if you created it from a taxable account like a regular Roth and then have a loss and want to "recharacterize" it to reduce taxes.


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