Stock Trades within a ROTH IRA

[Guest sgj]

Hello,

I recently opened a ROTH IRA with Ameritrade.

I believe in additon to investing in a fund, I am allowed to buy/sell stocks within this account.

How do buying and selling stocks affect my taxes at the end of the year?

If I realize a gain on a short or long-term trade do I have to pay a capital gains tax?

and conversely if I realize a loss can this be deducted when I calculate my year end taxes?

Or are gains/loss tax implications not recognized since they are within a ROTH IRA.

Thanks for your help.

sgj

[John G]

There are no tax consequences of transactions undertaken within either a regular or Roth IRA account. Long term , short term, dividends, income - have no meaning. Frequency of transactions have no impact either. You do not pay tax on any gains within any IRA during the year. Conversely, you generally will not be able to write off losses either. See the other questions on this message board that have addressed IRA losses - the process is complicated and subject to percent thresholds/limitations.

Regular IRA dispursements in retirement are treated as ordinary income.... you do not get the benefit of long term capital gains. Roth IRA dispursements in retirement are tax free.