To clarify a question I had on IRA's. What I really wanted to know was.Now that I rolled over my 401k into a

Question

IRA and a Roth....which are invested in mutual funds. Do I have to claim my gains (Interest,Divedens,est,est est) when I file my taxes every year or is it taxed as a whole at distrabution time?

Answer 1

When you have money in a traditional or Roth IRA, and have not taken money out, none of the income is claimed or reported on your tax returns.

When you take money out, your traditional IRA distribution is taxed as ordinary income. This means you do not list the distribution as capital gain, interest, or dividends, even though that is the source of the money. It is taxed just as your wages would have been taxed. There is a separate line on the Form 1040 for distributions, and this is just added to all your other income without regard to the type of income that was generated inside the IRA.

If you hold the Roth IRA account for five years, and are over 59.5 or meet one of the exceptions, none of the distribution is taxed. You report the distribution on a special line for this on Form 1040 but the taxable amount is zero. The type of income (interest, dividends, capital gain) is disregarded.

Answer 2

You are not allowed to roll a 401k directly into a ROTH IRA. I hope you rolled it into a traditional IRA first. Then you pay taxes on the amount of the (and when you) rollover from a traditional IRA to a ROTH IRA. In a ROTH, you never have to pay taxes on gains, interest, dividends, etc. again (unless the govt. changes the rules). In the Traditional IRA, you pay taxes when you get the distributions out of the IRA, not each year the mutual funds reinvests them within the IRA.

Answer 3

For money that's within and IRA, whether traditional or Roth, you do NOT claim any gains or losses each year. You only claim the amount of withdrawals - on a traditional IRA, that's taxed at ordinary income rates the year you withdraw it.

Answer 4

You have no tax implications from a retirement account until such time as you receive it in a distribution. The administrator of the account gives you a 1099R; or an equivilant form, at the end of the year so you can include the information in your tax return.

Answer 5

When you withdrAW. nOT at this time.
Also my parents had one and my father passed away. My mother was over 70 and the bank told me to withdraw all the funds a regulation.
This money was never taxed. So you may be in for a big smile on your face one day when you get old.

Answer 6

1) A 401k is usually not rolled over into a Roth since the former's contributions are tax-deferred and the latter's are tax free. Maybe you meant that you rolled the proceeds over to a straight IRA?
2) Nevertheless, you could rollover a 401k into a Roth provided you pay the accrued tax-deferred taxes.
3) Dividends and gains on a 401k and a straight IRA are usually reinvested and are not taxed until you take distributions.
4) When you file your taxes, you should report all investments (tax-deferred or tax-free) to the IRS since the mutual fund will likewise report it to the IRS (just as your bank will report interest income paid to you).

Answer 7

Taxed when you withdraw as income.

Answer 8

Yes, your gains will be "unrealized" until you withdraw them.