If I add $4000 to a roth IRA this year all in bank of america what happens to the 4.1% dividens that bac pays?

Answer 1

Are you buying Bank of America stock for the IRA or are you putting the money into that bank? Both are very bad decisions. Open an acct @ schwab.com & invest. If have an IRA at a bank roll it over to schwab. ADX PEO EFA EWA IAU SNH - all solid options. You DO NOT open IRAs at a bank. If you don't make your money work you can never stop working. Feel free to contact via answers for more info.

Answer 2

In a Roth IRA, you pay taxes on the contribution, but not its earnings. You have a choice how dividends are paid. Ask that the dividends are compounded daily and reinvested back into the IRA. That compounding of earnings earning earnings is the beauty of a Roth IRA because it can be withdrawn tax-free and, after a long period of time (in your example, 18 years or more) it will be greater than your taxed $4000 contribution.

Answer 3

If the Roth IRA is in a bank account you get interest from the bank.

The dividend is paid to shareholder of BofA stock. If your IRA is a brokerage account holding shares of BofA, quarterly cash dividends will be added to your account.