Since I'm over the threshold of AGI and cannot contribute to my Roth I

[Guest jhellyar]

Since I'm over the threshold of AGI and cannot add money to my Roth IRA, may I use the accumulated dividends within the Roth to buy stock, which would remain in the IRA ?

[Guest AFRICA6796]

Absolutely

[Appleby]

I agree with Africa. Stocks can be traded in your IRA as often as you wish.

If you really want to fund an IRA this year, consider making a contribution to a traditional IRA. It may be non-deductible based on your AGI, but at least you will still make an addition to your retirement fund.

[John G]

Funds that are legally contributed to an IRA or ROTH IRA become assets that must be managed. Cash will earn interest, stocks may yield dividends, bonds in various forms will produce income through "coupons" or capital gains, mutual funds will declare dividends/gains and stocks should appreciate. Over the life of an IRA you will typically make multiple decisions to deploy and redeploy assets to keep the funds productively engaged.

During the long "accumulation" period in an IRA there are no federal recordkeeping requirements on transactions since no taxes are paid. Long term gains, short term gains, interest and dividends have no real distinction within an IRA. You make your best investment decisions considering your personal risk/reward perspective and keep the records that you need to evaluate your progress.

Distribution period: For a Roth, legal distributions are tax free. For a regular IRA, distributions are taxed as ordinary income.

If your IRA assets are relatively small, I suggest that you consider a mutual fund rather than a stock or two. Why? Because you want diversification, small stock puchases are not efficient when you consider commissions, and the fund approach requires less time to evaluate corporations.