Q: What to do with IRA loss?

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date Q: What to do with IRA loss? Thomas Cruise 10-29-2007  Re: What to do with IRA loss? Elle 10-29-2007  Re: Q: What to do with IRA loss? PeterL 10-29-2007  Re: Q: What to do with IRA loss? BreadWithSpam 10-29-2007  Re: Q: What to do with IRA loss? Thomas Cruise 10-30-2007  Re: Q: What to do with IRA loss? Ron Peterson 10-29-2007  Re: Q: What to do with IRA loss? Thomas Cruise 10-30-2007  Re: Q: What to do with IRA loss? Ron Peterson 11-02-2007
Posted by Thomas Cruise on October 29, 2007, 5:01 am I have both Roth IRA and traditional IRA. Both have lost significant percentage of contribution/rollover. I have not made any contribution to either IRA for few years. I may not make any contribution in 2007 or 2008. What are the financial moves I can make to make lemonade out of lemon? I have no specific need to pull out money out of my IRA's, unless doing so would benefit me somehow? I would greatly appreciat any genuine advice. Posted by Elle on October 29, 2007, 11:42 am In what are your IRA funds invested? Posting this can help the group help you. At a minimum, I suggest you commence a study of how "asset allocation" has historically paid off well /for the long term./ Were your IRA investments diversified? How old are you? When do you plan to retire? Does your employer offer a 401(k) with matching? How much, if any, is matched? Lastly, do not stop contributing to your IRAs. The earnings growth of an investment made early far exceeds that of an investment made late. Posted by PeterL on October 29, 2007, 12:09 pm > I have both Roth IRA and traditional IRA. > Both have lost significant percentage of contribution/rollover. > I have not made any contribution to either IRA for few years. > I may not make any contribution in 2007 or 2008. > > What are the financial moves I can make to make lemonade out of lemon? > I have no specific need to pull out money out of my IRA's, unless doing so > would benefit me somehow? > I would greatly appreciat any genuine advice. Why have you lost a significant percentage? Is it because of the choice of funds? Is it because of fees imposed? Posted by on October 29, 2007, 1:23 pm > I have both Roth IRA and traditional IRA. > Both have lost significant percentage of contribution/rollover. > What are the financial moves I can make to make lemonade out of lemon? In theory, you can "realize" a loss in an IRA (Roth or traditional, though only in the case where the traditional was funded with after-tax money - ie. it is has a "basis"). In practice, I don't know of anyone who has actually done this, nor is it likely a good idea. Basically, if you have a loss in the IRA if (a) the IRA is fully liquidated and distributed and (b) the proceeds from doing so are less than your basis. If you have no non-deductible contributions to a traditional IRA, your basis is zero and there's no chance of deducting anything. A Roth's basis is the sum of the contributions to it. You may realize a loss there - but *should* you? I'd say probably not. Losses realized this way are subject to a variety of restrictions, too - they are not even as useful as normal capital losses (which may offset capital gains and even some regular income). IRA losses, if you can manage to find them (via the rules regarding basis, etc) get deducted only as part of itemized deductions on sched. A as "misc. deductions" only to the extent that they exceed 2% of your AGI -- and you don't even get that if you're subject to AMT. In the meantime, having liquidated your IRA, you are now set back by having to start funding it again, a little at a time, to save for retirement in the most tax efficient way. It's very unlikely that taking those losses now is worth the potential loss of several years of tax-free or tax-deferred investing you could have had by just leaving the money where it was. Unless your situation is quite extraordinary, your best bit is very likely just to review those IRA portfolios, make sure the money's invested well and diversified and be patient. Google "IRA Loss" and read a few of the hits there, but don't count on much. If you're really still going to do this, I'd recommend consulting an accountant. And consider whether those losses will exceed how much that accountant will cost, too. -- Plain Bread alone for e-mail, thanks. The rest gets trashed. No HTML in E-Mail! -- http://www.expita.com/nomime.html Are you posting responses that are easy for others to follow? http://www.greenend.org.uk/rjk/2000/06/14/quoting Posted by Thomas Cruise on October 30, 2007, 5:03 am BreadWithSpam@fractious.net wrote in > >> I have both Roth IRA and traditional IRA. >> Both have lost significant percentage of contribution/rollover. >> What are the financial moves I can make to make lemonade out of lemon? > > In theory, you can "realize" a loss in an IRA (Roth or > traditional, though only in the case where the traditional > was funded with after-tax money - ie. it is has a "basis"). > > In practice, I don't know of anyone who has actually done > this, nor is it likely a good idea. > > Basically, if you have a loss in the IRA if (a) the IRA > is fully liquidated and distributed and (b) the proceeds > from doing so are less than your basis. > > If you have no non-deductible contributions to a traditional > IRA, your basis is zero and there's no chance of deducting > anything. > > A Roth's basis is the sum of the contributions to it. You > may realize a loss there - but *should* you? I'd say probably > not. > > Losses realized this way are subject to a variety > of restrictions, too - they are not even as useful as > normal capital losses (which may offset capital gains > and even some regular income). IRA losses, if you can > manage to find them (via the rules regarding basis, etc) > get deducted only as part of itemized deductions on > sched. A as "misc. deductions" only to the extent that > they exceed 2% of your AGI -- and you don't even get > that if you're subject to AMT. > > In the meantime, having liquidated your IRA, you > are now set back by having to start funding it again, a > little at a time, to save for retirement in the most tax > efficient way. It's very unlikely that taking those > losses now is worth the potential loss of several years > of tax-free or tax-deferred investing you could have > had by just leaving the money where it was. > > Unless your situation is quite extraordinary, your best > bit is very likely just to review those IRA portfolios, > make sure the money's invested well and diversified and > be patient. > > Google "IRA Loss" and read a few of the hits there, but > don't count on much. > > If you're really still going to do this, I'd recommend > consulting an accountant. And consider whether those > losses will exceed how much that accountant will cost, too. > This is very good advice, and I was contemplating these options. Thanks for educating me on this. ======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted. 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