I have some stocks in my Roth and Traditional IRA that have had significant run up in value. I would like to sell them in the tax deferred accounts and buy them in my taxable account. Will this reset the basis of the stock, or would it transfer over to the taxable account with an immediate sell/purchase? Resetting the basis of the stock to a higher purchase price would be a plus, but not the primary reason for doing the transaction.
TIA,
IP
[deleted] and take 20 characters to lunch, Fool.
No. When you sell in the Roth or Tira the profits stay in the accounts. Purchases in the taxable account have their own basis when purchased.
Moving funds as a distribution from either account has to follow the rules. From the Tira is taxable as ordinary income less an allowance for after tax contributions. Assuming you are over 59-1/2.
I think it is worth adding a note that does not apply to this question, but is important to understand. I hope I am not going to confuse anyone, at least not too badly.
If the situation was reversed twice, the answer would be different.
The first reversal would be selling at a loss, rather than a gain, resulting in a loss.
The second reversal would be selling the the regular account (a loss for tax purposes), but buying the same security in the IRA within 30 days either side of the sale. That triggers the wash sale rule.
If a security is sold in a non-retirement account at a loss, then an identical investment is bought in an IRA, the result is a wash sale.
No. IRAs are like Vegas. What happens in the IRA stays in the IRA - with the one exception that @RHinCT noted about selling at a loss in a taxable account and buying a substantially identical security in your IRA within 30 days (before or after). This creates a wash sale where you lose the ability to claim the loss because the basis is applied to a security held in the IRA.
Actually, that’s still kind of like Vegas - because the loss in basis remains in the IRA, where there is no way to realize it from a tax perspective.
AJ
Thanks Paul. Not taking the funds out, but giving them over to someone to manage. Since I want to keep these two stocks without paying his fee to “manage” them, am selling them in the IRAs and buying them in the cash heavy taxable accounts with a higher basis to mitigate risk. If they go down from here after their 30% rise from original purchase in the IRAs, I can at least use the loss from current valuations for tax loss harvesting, which cannot be done in the IRAs.
I turn 60 this month.
IP