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Here at Chadmere Capital Inurance and Financial Services, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

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ROTH IRAS AND RMDS: TODAY’S SLOTT REPORT MAILBAG

By Beverly DeVeny
IRA Analyst

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.

https://www.irahelp.com/slottreport/roth-iras-and-rmds-todays-slott-report-mailbag

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