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All the money coming into the Roth IRA is post tax money, whether it was cash or IRA conversion. Once in the Roth IRA, you can sell for a profit and rebuy diffe
by megaman821 5y ago
All the money coming into the Roth IRA is post tax money, whether it was cash or IRA conversion. Once in the Roth IRA, you can sell for a profit and rebuy different stocks without paying tax on that profit. Outside the Roth IRA selling for a profit would be a taxable event. Trading stale stocks for fresh new winners without paying the tax inbetween is an incredible advantage to growing your wealth.
- nostrademons 5y agoThat's the intended benefit of Roth IRAs though, even for middle-class investors. That you can buy & sell within them without paying capital gains tax. It's not usually a huge problem in the public markets because they're extremely liquid, with generally symmetric information across all participants, and that liquidity makes it hard to generate extremely excessive investment returns except by luck. But private companies are illiquid, oftentimes with huge asymmetries of information, and that lets you generate 10,000%+ investment gains by happening to have an opportunity to invest in a rocket ship that other people can't get into.