Date for Recognizing a Loss on a Roth IRA - Can it relate back to prior year (current filing year) i


J

John Smith

1. I have a loss on a Roth IRA that is deductible. However,
I did not liquidate the balance of the Roth IRA account as
requied until March 10, 2006. May I deduct the loss on my
2005 1040 or am I stuck w/doing so in 2006. I ask this
because April 15th is an extended deadline for making
contributions.

2. The second ? relates to establishing a 2nd separate
non-rollover Roth IRA to handle the contribution for 2005.
Am I OK to do that irrespctive of the loss I am taking on
the Roth IRA noted above.

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H

Herb Smith

John said:
1. I have a loss on a Roth IRA that is deductible. However,
I did not liquidate the balance of the Roth IRA account as
requied until March 10, 2006. May I deduct the loss on my
2005 1040 or am I stuck w/doing so in 2006. I ask this
because April 15th is an extended deadline for making
contributions.
The distribution (liquidation) occurred in 2006, therefore
any Schedule A would not be available to you until next
year. The contribution deadline is irrelevant.
2. The second ? relates to establishing a 2nd separate
non-rollover Roth IRA to handle the contribution for 2005.
Am I OK to do that irrespctive of the loss I am taking on
the Roth IRA noted above.
Sorry, you can't have it both ways. Since you liquidated
your Roth IRA in 2006, you have to stay out until 2007.
That means NO contribution for 2005 or 2006.
 
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R

Rich Carreiro

John Smith said:
1. I have a loss on a Roth IRA that is deductible. However,
I did not liquidate the balance of the Roth IRA account as
requied until March 10, 2006. May I deduct the loss on my
2005
No.

1040 or am I stuck w/doing so in 2006.
Yes.

I ask this because April 15th is an extended deadline for making
contributions.
That doesn't affectwhen losses are taken.
2. The second ? relates to establishing a 2nd separate
non-rollover Roth IRA to handle the contribution for 2005.
Am I OK to do that irrespctive of the loss I am taking on
the Roth IRA noted above.
Probably not. To claim the loss, you need to close *all*
your Roth IRA accounts. If you opened a new Roth account
in 2005 and then closed the first Roth account in 2006
you have obviously not closed all your Roth accounts.
 
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A

A.G. Kalman

John said:
1. I have a loss on a Roth IRA that is deductible. However,
I did not liquidate the balance of the Roth IRA account as
requied until March 10, 2006. May I deduct the loss on my
2005 1040 or am I stuck w/doing so in 2006. I ask this
because April 15th is an extended deadline for making
contributions.
It is a 2006 transaction. Also note that you can only have a
loss when the balance in ALL of your Roth IRA accounts is
zero and the amount returned to you is less than your
contributions plus conversions.
2. The second ? relates to establishing a 2nd separate
non-rollover Roth IRA to handle the contribution for 2005.
Am I OK to do that irrespctive of the loss I am taking on
the Roth IRA noted above.
See above answer. As long as you a have a Roth IRA balance,
you do not have a deductible loss.
 
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