Roth IRA earnings

[trader345]

Normally if you have capital gains in a Roth IRA account and you withdraw them before you're 59.5, you must pay tax on them and a 10% penalty. I am wondering if you have capital loss carryover from a non-Roth account if you can apply the Roth earning against that to avoid paying tax on them if you prematurely withdraw the earnings.

 

[Free Thinker]

Quote from trader345:

Normally if you have capital gains in a Roth IRA account and you withdraw them before you're 59.5, you must pay tax on them and a 10% penalty. I am wondering if you have capital loss carryover from a non-Roth account if you can apply the Roth earning against that to avoid paying tax on them if you prematurely withdraw the earnings.

havent researched it but i would guess yes up to the 3000 limit per year. roth early withdrawls are considered ordinary income not capital gains.

 

[trader345]

That's unfortunate that Roth IRA earnings which are withdrawn would be considered ordinary income instead of capital gains, because then that eats into your $3000/year allowance (for using capital losses against ordinary income). I wonder if it matters whether the Roth earnings were derived from stock sales or from something else like money market earnings, bonds, etc.