Question about tax on stock capital gain within IRA?

[20092009]

Quote from gkishot:

Since the contributions to IRA account are limited so what are you going to do to with the rest of your trading capital? Unless you don't have more than $5,000 per year.

Oh, my confusion is this part, say, I contribute $3000 to my newly open roth IRA, and I use this $3000 to make $100000 during this year, so can I buy stock up to $100000 next year? Since I don't make new contribution to my roth IRA, the $100000 is simply capital from previous year.(Just assuming, need the tax policy for this kind of assuming situation)

Thanks a lot.

 

[gkishot]

Quote from 20092009:

It makes sense that withdrawals on principle contribution are free, since the principle contribution are already taxed.

But how the withdrawals on capital gain from stock market?

Thanks.

For the tax purposes IRS looks only at contributions to IRA account ( ins ) and withdrawals from IRA account ( outs ).
IRS is not concerned with all your transactions on the account ( they are ignored by IRS). Neither IRS is concerned with total balance on the account.

 

[20092009]

Quote from gkishot:

For the tax purposes IRS looks only at contributions to IRA account ( ins ) and withdrawals from IRA account ( outs ).
IRS is not concerned with all your transactions on the account ( they are ignored by IRS).

Actually, you did not answer my question, say, I make only one deposit $3000, and I turn this $3000 into $100,000 at the end of this year. So next year can I invest all the $100,000 on the stock market? Since there is $5000 limit on IRA account. Or I can only invest $5000 on the stock market?

Assuming by playing the money, and the initial $3000 turn to 3 millions dollars when I turn to 59 1/2? Can I get the 3 millions dollars for tax free?
(Just assuming for this kind of case)

Thank you very much!

 

[gkishot]

Quote from 20092009:

So next year can I invest all the $100,000 on the stock market?

Assuming by playing the money, and the initial $3000 turn to 3 millions dollars when I turn to 59 1/2? Can I get the 3 millions dollars for tax free?
(Just assuming for this kind of case)

Thank you very much!

1. Yes, you can. As I said IRS has no interest in what you do with your money once it is in IRA account.
2. Yes, you can in Roth IRA.

 

[20092009]

Quote from gkishot:

1. Yes, you can. As I said IRS has no interest in what you do with your money once it is in IRA account.
2. Yes, you can.

Thanks, then how much penalty should I pay if I withdraw the earning before I turn to 59 1/2? You know, we pay a lot on tax, if the penalty is low, then people should use roth IRA to trade stocks.

 

[love2puck14]

Quote from 20092009:

For example, if I deposit $5000 into IRA, and I use this $5000 to trade the penny stock, and I make a lot of money, but I keep the capital gain in my IRA, and keep trading stocks for short term by using my IRA cash, for example, if I turn this $5000 to one million dollar in 10 years, do I need to pay tax on the capital gain from my IRA?

Thank you very much!

i feel dumber for having read this post... i hate when people on all forums say this but.... TRY GOOGLE! why would you post such stupid questions!

 

[tman]

http://www.irs.gov/publications/p590/ch01.html#en_US_publink10006430

You may avoid the 10% penalty for early withdrawal if you take money out in "substantially equal payments".

 

[el pollo]

This whole thrread made me dizzzzzy!
Why do people make a simple thing into a mish mosh?

If you plan to withdraw your capital out of any IRA, pre 59 1/2 there is NOT a tax advantage.

If you trade the capital in an LLC, you can expense the kitchen sink, to save tax. (Office, car...etc, phones, infrastructure.)

You might consider consulting with a CPA, and not depend on paper traders' advice on an internet forum!