The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: westcl2 on September 18, 2015, 10:11:36 AM
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So I have a normal brokerage account w/ ~20k in stocks. I want to convert this over to some form of IRA and want advice on which would be better for tax purposes.
Normal marginal bracket 25%
I recently swapped my stocks over from a personal holding to a vanguard brokerage account (not sure if this alters capital gains timing). Assuming that it doesn't I've held these stocks for quite a while and they all qualify for capital gains rates.
Right now I have a roth IRA and thinking I can sell off shares and make my annual contribution for the next couple years from this brokerage fund at cap gains rate seems like about of a tax scenario I can imagine. also by putting the funds in my roth I can contribute to the preferred shares vanguard indexes instead of starting at the higher expense ratio ones (minor but why not?)
But I was curious if there was an argument to just throw it in a traditional IRA
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See http://forum.mrmoneymustache.com/investor-alley/deciding-between-roth-and-traditional-ira-based-on-marginal-tax-rate/. Does that answer your question, or is there something else?
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it kind of covers what I was looking for....most everything in that appeared to me as contributions from income. I'm looking to see if it's beneficial to sell off a brokerage account to fund a traditional ira
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I'm looking to see if it's beneficial to sell off a brokerage account to fund a traditional ira
If you can fund it from W-2 income, you can leave the brokerage money invested and not pay the capital gains tax that would be due if you sell.
Either way there is a $5500 deduction (assuming you qualify). Funded from income there is no other tax, but funded from stock sale you pay capital gains tax.
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Yeah, it's better to contribute out of your paychecks if you can afford to do that. Otherwise selling stocks to fund an IRA is not a bad idea at all. If you're in the 25% bracket I would suggest a traditional IRA if you qualify to make deductible contributions.