Time To Roth Some Beaten Down Securities?
The light of my life came up with an interesting idea yesterday. If you have some really beaten down stocks that you are planning on holding, now might be a great time to transfer them to your Roth account.
The rational is that the current market value counts as the value of the transfer. But when the stock rebounds it does so in your Roth account and the rebound won't be taxed. Ever.
If you decide to do this, observe the contribution limits on your Roth account and take your overall tax picture into the decision. We are doing this on some steam rolled retailers that are good long term holdings.
If you do this from an IRA account, you will need to pay the taxes and penalty on the transfer. But it still might be worthwhile to do this if the stock has been flattened enough. You will only pay taxes and penalty on the current market value, not what you paid for the stocks or what they might be worth later.
Chris - not a tax advisor, seek appropriate counsel before you make any moves