Author Topic: trying to open first roth ira and have a tricky question  (Read 723 times)

antonia

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trying to open first roth ira and have a tricky question
« on: February 22, 2018, 06:22:45 PM »
Hi everyone- I've been a reader on this forum for quite some time and have been impressed with all of the excellent advice. After reading the Investment Order post, I made up my mind to open and max out a Roth IRA for 2017.

I was granted some RSUs from my job and today some of them vested. The way this happened was that automatically they sold enough of the shares to cover taxes and fees. The leftover balance is about $7,800, which is the money I'd like to use to cover the $5,500 for my Roth IRA. This leads me to my questions:

1. How much additional tax (if any) is going to be taken out when I withdraw this stock? The price when it was vested/released to me/part of it used to cover taxes was $53.23, and last trade today was $52.41.
2. How much tax do I need to pay when putting money INTO a Roth IRA? I couldn't find anywhere online that could give me an answer, all that websites said was that this is when I would be charged tax on the $.

Essentially, I want to figure out the exact amount of stock to take out (with selling taxes, if any, factored in) to fully fund the Roth (with taxes you pay on $ going into a Roth factored in). Please help!

Mezzie

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Re: trying to open first roth ira and have a tricky question
« Reply #1 on: February 22, 2018, 07:13:58 PM »
You don't pay taxes upon contributing to a Roth; you're simply using post-tax dollars. Basically, you won't be able to write off your contribution, so you'll be paying taxes on that money along with ALL your earned money that can't be deducted.

I'll let someone else help you with your stock question.

Rob_bob

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Re: trying to open first roth ira and have a tricky question
« Reply #2 on: February 22, 2018, 07:22:28 PM »
So that $7800 is the value of shares you still own, not cash?  If the vested price per share was $53.23 and the last price was $52.41 then that is a loss which could be a tax deduction.  If you sell for more than $53.23 then it is a profit which may or may not be taxed depending on your tax bracket.

However I have never dealt with RSUs so wait for someone who knows what they are talking about LOL.

secondcor521

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Re: trying to open first roth ira and have a tricky question
« Reply #3 on: February 22, 2018, 08:09:24 PM »
Several things:

1.  They didn't automatically sell some of your stock to cover taxes and fees.  You made that decision and informed your company and/or the custodian of your RSUs at some point.  Take responsibility.

2.  I had a long complicated answer about how to figure out how many shares to sell, but your cost basis is probably about $53 and you'll probably sell it for about $53, so your capital gains or ordinary income will be about $0 and your incremental taxes will be about $0.  So just take the $5,500 and divide it by the stock price of $53 and you'll discover you should sell about 104 shares.  I'm skipping over a bunch of complexity that you probably don't need to worry about unless your stock price is very volatile or unless your finances are so tight that you can't afford an unexpected $50 cost in your budget.

3.  If you really want to contribute to a Roth IRA, you'll need to complete the contribution by the filing deadline in April this year (I think it's April 17th this year.)  Since you're opening a new IRA, you'll need to allow some time to complete the opening paperwork and process with the IRA custodian.

4.  Mezzie was correct - you won't owe any taxes on the money you put into the Roth IRA, so the answer to your question #2 is $0.