If an excess distribution is made from a Roth IRA-lower than the contribution, can a capital loss be recorded?

Posted by admin
JP5 asked:


Example:
Dec 2007: $4000 Roth IRA contribution made in fund XYZ
Jan 2008: Value of investment in fund XYZ falls to $3500. Determined that $4000 was an ineligible contribution so $3500 is withdrawn.
April 2008: $500 capital loss for tax year 2007?

KERRY
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This entry was posted on Sunday, December 14th, 2008 at 11:10 pm and is filed under United States. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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2 Responses to “If an excess distribution is made from a Roth IRA-lower than the contribution, can a capital loss be recorded?”

  1. MARSHALL Says:
    December 16th, 2008 at 3:22 pm

    NOAH

    Not unless you closed out *all* of your Roths.

    See publication 590 for a worthless itemized deduction that year. (The loss wouldn’t go on schedule D, but schedule A in the 2% section.)

  2. ABRAHAM Says:
    December 16th, 2008 at 4:02 pm

    OCTAVIO

    A capital loss is not reported for money in any kind of IRA.