Quote:
Originally Posted by Steve9930
Here is what I did and it worked great. I had a self directed IRA and was investing in the stock market. I had several stocks that where good companies but the stocks were beaten down. I opened a Roth and moved those stocks into the Roth and only paid Federal taxes on the lower amount of their value. Since that time all have recovered This March was the 5 year anniversary so now that gain and the dividends being generated are all now Federal Tax Free. I only wish I had done this years ago. There are so many advantages to the Roth IRA. Like the cash generated not be part of the SSN Taxing equation and the ability to pass the Roth on. I smile every time I take money out of the Roth and walk right by the tax man....... HooRa!
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This may (or may not) happen with any investment vehicle with a fluctuating asset value--not just stocks. In your case, the timing turned out to be to your advantage. You were lucky. At least so far.
The opposite could just as well have occurred if the asset value had decreased after having been moved to the Roth. If your stocks now in the Roth go down, the value of the Roth decreases. Your post may imply that, somehow, the Roth protects assets from a falling market. Not at all.
I do agree that the tax free nature of Roth money is sweet. YOU own the whole enchilada.
When one looks at their balance of a traditional IRA, one needs to understand they only own PART of it. If the balance is $100k and you're in the 25% tax bracket, you only own $75k. Sobering thought.
Sorry...I don't mean to restate the obvious.