IRA Rollover

Archive for May, 2009

Question: Could losses on current investments be used to partially rollover IRA $ to Roth IRA $ without paying taxes?

Answer: Your capital losses can only be used to offset capital gains. An IRA rollover is ordinary income and does not include capital gains.

If capital losses exceed capital gains, you may use $3,000 of the loss to offset other income. This may include income from a rollover of an IRA to a Roth IRA.

You pay tax on the rollover IRA at your regular tax bracket, when the amount of the rollover is included. If you offset your other income with losses, the tax on the amount of the rollover is reduced.

But, as stated earlier, the rollover amount cannot be directly offset by capital losses.

What can a Roth IRA do for you? – Vanguard