Roth IRA Loss

[Guest jgoing]

I have a client that put $2,000 into a Roth IRA. The Roth is now worth $500. Can they close the Roth and take a loss? Would you tell me where you found your answer?

[John G]

Ok, this has been covered from a variety of angles over the past year. Readers of this message board can utilize the "search" feature at the bottom of the main Roth page to pull up matches with a topic like "tax losses"... it searches the entire Benefits Link web site, so if you question is just about Roths or IRAs add that to the key words.

Check these threads:

http://www.benefitslink.com/boards/index.p...ST&f=18&t=12458

http://www.benefitslink.com/boards/index.p...ST&f=18&t=17047

http://www.fool.com/taxes/2002/taxes020222.htm

The most likely scenario is that your taxpayer will not find it attractive to jump through all the hoops to write off $1500. It takes effort, eliminates your shelter and must exceed the threshold to be deductable.

My advice. Remember the lesson learned. Don't bet narrowly on just tech or growth stocks. Over a lifetime, this amount will eventually become rounding error, regardless how painful it is right now. You can find this topic in IRS Publication 590, although it is covered very briefly and is not the clearest writing.