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Old 02-08-2015, 10:12 PM
 
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Quote:
Originally Posted by Bradmilano View Post
I deal with this situation often with my clients. Bottom line...if you take a distribution from a roth, as long as meet all of the eligibility requirements you can still make the maximum contribution.
Thank you. That's all I was asking. I actually work in the industry but wanted to double check. My expertise is in pension fund investing and administration.

There are reasons for doing certain transactions in a certain order and they aren't all the same for everyone. Depends on the variables. Thanks.

And for all you smug posters belittling...I don't need to say it.

Best wishes to us all!
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Old 02-08-2015, 10:22 PM
 
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Quote:
Originally Posted by Bradmilano View Post
Let's assume You have enough cash to pay for all of your daily expenses. In addition every month you put $500 into a Roth IRA because you have earned income and have the ability to do so. You want to continue funding this roth for as many years as you are able to do so. Because one day you won't have the unearned income any more and you will have lost the ability to do so. Roth contributions make you happy because you are an above par active trader who can make substantial gains in the market and the roth allows you to do this and never get taxed on the gains. In addition you have a decent taxable account that has some modest unrealized gains. The Roth has $2million and the taxable account has $1 million. You want to buy a condo for $200,000. In order to pay for the condo you either have to sell some stock In your portfolio (and pay tax on the profit) or you can take the money from your roth which has grown substantially in a tax free environment. What do you do?

Forget about the ability to borrow on margin. That's outside of this scenario even though it may be a better play than a roth distribution. What I am asking is faced with only those two choices, what do you do?


The OP is just asking if he can take a distribution out of the roth and make a contribution in the same year.
This is exactly the type of scenario which prompted me to ask the question even though "I can't do math."
Thanks for providing these folks with a little free education.
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Old 02-08-2015, 10:27 PM
 
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Quote:
Originally Posted by Bradmilano View Post
Yes, you can still make a 6500 contribution and take distributions.

What the other commenters don't seem to understand, and which I think you are trying to say, is that you don't have enough liquidity outside the roth to pay for taxes or other living expenses. (Or you don't want to waste the other liquidity) If you couldnt take the distribution from the roth you'd have to sell stocks in a taxable account which would cause a liability. Instead you will sell the stocks within the roth, take the distributioms to pay your taxes on your other taxable income (not the roth) or other expenses and still be able to fund the roth.
Good luck.
Just saw this. Yes, I don't want to waste the other liquidity. Exactly my point. Plus, I'm an active, above average trader and do it in my Roth ( not recommended for others on this thread). Thanks.
Deep in the money calls can also work well. (Not financial advice). .
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Old 02-09-2015, 07:07 AM
 
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How would this be better than a 60 day loan?

You aren't in a special situation that only one poster understands. What you are asking about doesn't make much sense.
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Old 02-09-2015, 08:36 AM
 
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Originally Posted by Lowexpectations View Post
How would this be better than a 60 day loan?

You aren't in a special situation that only one poster understands. What you are asking about doesn't make much sense.
Not true. There's many implications. Most here aren't sophisticated enough to understand them. I'm not here to discuss them. Brad Milano, as a professional person does understand. As do I. I merely wanted to make sure what I sked was true. It is. There are reasons why you would want to trade a Roth rather than trade your personal account, for example. Many other issues related, also.

Go back and read Brad's explanations.
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Old 02-09-2015, 08:44 AM
 
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Originally Posted by Burkmere View Post
Not true. There's many implications. Most here aren't sophisticated enough to understand them. I'm not here to discuss them. Brad Milano, as a professional person does understand. As do I. I merely wanted to make sure what I sked was true. It is. There are reasons why you would want to trade a Roth rather than trade your personal account, for example. Many other issues related, also.

Go back and read Brad's explanations.


Then explain the situation where it makes sense to take money out of your Roth and then make a contribution to the same Roth. I am a professional that has been in this business for more than a decade and a half. You aren't making any sense on the withdraw/contribution combo. Trading is really irrelevant here in a withdraw/contribution discussion at least up and to the dollar figure of the contribution. This has nothing to do with sophistication level either
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Old 02-09-2015, 08:46 AM
 
18,711 posts, read 13,485,028 times
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Quote:
Originally Posted by Burkmere View Post
This is exactly the type of scenario which prompted me to ask the question even though "I can't do math."
Thanks for providing these folks with a little free education.
If you are going to take out 200k as the above scenario and contribute 6500 it makes no difference if you do I that way or just take out 6500 less. That's why his explanation makes no sense
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Old 02-09-2015, 08:52 AM
 
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Quote:
Originally Posted by Burkmere View Post
Not true. There's many implications. Most here aren't sophisticated enough to understand them. I'm not here to discuss them. Brad Milano, as a professional person does understand. As do I. I merely wanted to make sure what I sked was true. It is. There are reasons why you would want to trade a Roth rather than trade your personal account, for example. Many other issues related, also.

Go back and read Brad's explanations.
What are those reasons and issues? If you clarify those maybe it would be clear what the advantages are. Give us an example where you'd withdraw $200000 from the Roth, contribute $6500 to the Roth, and come out ahead than if you had only withdrawn $193500 from the Roth and used the $6500 cash you had.
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Old 02-09-2015, 09:17 AM
 
18,711 posts, read 13,485,028 times
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Quote:
Originally Posted by arrieros81 View Post
What are those reasons and issues? If you clarify those maybe it would be clear what the advantages are. Give us an example where you'd withdraw $200000 from the Roth, contribute $6500 to the Roth, and come out ahead than if you had only withdrawn $193500 from the Roth and used the $6500 cash you had.


At best you could make the 200k distribution on 01/01/15 you could pay as much of it back as you had available within 60 days and then you would have until 04/15/16 to make the 2015 6500 contribution. That's the best case benefit. However I must say if you were such a fantastic trader having that cap out of your Ira for so long would do more harm than good

Last edited by Lowexpectations; 02-09-2015 at 09:30 AM..
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Old 02-09-2015, 09:24 AM
 
1,212 posts, read 1,851,302 times
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Quote:
Originally Posted by Lowexpectations View Post
At best you could make the 200k distribution on 01/01/15 you could pay as much of it back as you had available within 60 days and then you would have until 04/14/16 to make the 2015 6500 contribution. That's the best case benefit. However I must say if you were such a fantastic trader having that cap out of your Ira for so long would do more harm than good
Aren't you gambling with the fluctuations of the share prices of the investments in the Roth?

Unless you were selling the shares that make up the distribution at a higher price than the share price that you were buying back into, I don't see how this works. This reminds me of that last thread where someone was saying to pay a tax bill by selling investments instead of keeping cash on hand.
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