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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ken Ludwig who wrote (50159)	11/25/2012 11:12:23 AM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 78742

OT - I am not a CPA or tax lawyer. I thought that stocks could not be transferred to a Roth from a regular IRA or a taxable account. I have been told that the stocks must be sold and the cash transfered. I have transferred stocks from regular IRA to Roth without selling, so it is possible. May depend on your broker? You cannot transfer stocks from taxable account to Roth. I have also been told that tax losses from a taxable account cannot be used to reduce taxes on withdrawals from a regular IRA. Rollover from regular IRA to Roth is taxed as regular income and not as cap gains AFAIK. So you cannot offset it with cap gain losses in regular account. You can only use the $3K (I think) of losses per year to offset regular income. Consult a CPA though.

To: Ken Ludwig who wrote (50159)	11/25/2012 11:21:59 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78742

More ira to Roth: "stocks could not be transferred to a Roth from a regular IRA..." Negatory. As I say, I've done the transfer many times. A mere two minute phone call to my broker and done. Easy. (Ira and Roths are at the same brokerage.) "stocks could not be transferred to a Roth from a regular IRA or a taxable account" ??? Are you saying moving Roth stocks into taxable account or are you saying Ira stocks into taxable account? I've never done either. Ought to be doable though, I'd guess. "...the tax losses from my taxable account to cover the taxes due. Is this in any way possible" Afaik, no. A transfer from ira to Roth means you will have the $ amount transferred as ordinary taxable income. Depending on your overall stock loss amounts in your taxable account, you can offset some of your total ordinary income. A maximum of $3000 (joint filer) per year deduction from your ordinary income. So I'd say your net taxable losses might give you a small offset to your taxable income. Not enough I'd guess to cover the amount of taxable income you'd be seeing in moving stock(s) from ira to Roth. I'm trying to say your taxable losses may give you a little offset to your total income, but other than such an offset, I agree that "... tax losses from a taxable account cannot be used to reduce taxes on withdrawals from a regular IRA." Of course, all jmo and what I've been doing. I'm no tax expert.

To: Ken Ludwig who wrote (50159)	11/25/2012 11:31:52 AM
From: E_K_S	Read Replies (1) \| Respond to of 78742

OT - But could effect general Value investment decisions Wow Ken - I guess the States can make their own Tax rules and do not have to follow the Feds. When Michigan instituted a 4% State tax on ROTH withdraws did they also have a tax on the money converted from the IRA to the Roth? Luckily I now live in a state that has no State income tax but what would prevent any and all states imposing their own tax on any other income stream(s)? CA raised it's sales tax (they say the increase is only for 5 years). I guess certain states provide one time property tax "rebates" for companies that move their business operations to that state. So it's not out of the question. Could we get special state and/or federal tax treatment by buying certain "value" investments? This is a slippery slope and all states and even the Feds must be careful to limit their "special" tax treatments on specific investments. I thought we wanted to simplify the overall tax code. FWIW, as far as I know, the Feds only allow up to a $3K loss from either short and/or long term investment losses (net of all gains) to be used to reduce ordinary income and/or IRA to Roth conversion amounts. In the article I posted up thread, you can book capital losses and use those losses to reduce other capital gains. The article goes on and states you can then use the money from your sales to pay all or a portion of the IRA to Roth conversion tax. So there is no free lunch. What I am planning on doing since I keep both losses and gains in the portfolio is (1) after I sell some of my losers and buy them back after 31 days I generate (sometimes) a net after sale/buy gain, (2) Use my booked losses to reduce all of my capital gains to record a net $3K loss and (3) apply the $3K loss against a portion of the IRA to Roth conversion amount AND apply my extra net buy/sale cash to the calculated Roth conversion tax. I will then tweak this year's Roth conversion amount up to but not exceeding the next marginal threshold tax rate tier. I already ordered my 2012 Turbotax Premiere program to help me drill down to the specific calculation amount. I do not know how difficult it will be to accomplish that but it will be all for not if either the States and or the Feds change the taxing rules in the years ahead. Finally, for me the biggest benefit in the tax planning is as the rule now states, the beneficiaries of the Roth account(s) will not be subject to any Federal tax on the balance in the account(s) when transferred on my death. So if left to a grandchild, it could be a big help in paying for college tuition and when allowed to grow, a little gift could get quite big by the time the child enters college. EKS

To: Ken Ludwig who wrote (50159)	11/25/2012 2:29:06 PM
From: CusterInvestor	Read Replies (2) \| Respond to of 78742

Since MI is a state I have considered moving to, I decided to look further into this tax. So far I found this: michigan.gov Which pension benefits will be taxed? Under Michigan law, qualifying pension and retirement benefits include most payments that are reported on a 1099-R for federal purposes. This includes defined benefit pensions, IRA distributions, and most payments from defined contribution plans. Payments received before the recipient could retire under the provisions of the plan or benefits from 401(k), 457, or 403(b) plans attributable to employee contributions alone are taxable under Michigan law. We are financial planners and are working with a custodian to withdraw money from a Roth IRA for one of our clients. Is a distribution from a Roth IRA taxable and subject to the 4.35% withholding? Law (MCL 206.703) requires pension withholding on any IRA distributions that will be subject to Michigan tax at the end of the year on the beneficiary’s Michigan income tax return. In general, distributions from Roth IRAs are exempt from both Michigan and federal income taxes, and no pension withholding would be required. However, if part of the distribution is taxable, then Michigan pension withholding would be required on the taxable portion of the distribution. A portion of the distribution from a Roth IRA may be taxable when a recipient receives a nonqualified distribution. Nonqualified distributions from Roth IRAs are determined by reference the Internal Revenue Code.