Can I deduct losses in my Roth account without liquidating?

September 21, 2005

Subject:  Roth IRA Loss
Date:  Wed, 7 Sep 2005
From:  Dick

I lost $2,000 on an investment held in a Roth account. The investment represents about 14% of the account. Can I deduct the loss without totally liquidating the account?

I will appreciate hearing from you on an issue that has long been a source of dispute/question.

Answer

Date:  Wed, 14 Sep 2005

Hello Dick,

No. You must totally liquidate ALL of your Roth accounts to report a loss. Not only that, losses from totally liquidated Roth accounts are miscellaneous itemized deductions, and are reduced by 2% of adjusted gross income. See IRS Publication 590.

Good luck!
Mike Gray

For more information about Roth and traditional IRAs, buy our book: How to use Roth & IRA accounts to provide a secure retirement, 2012 Edition!

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