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I sold two mutual funds and I had a loss of $10,000. If I transfer $50,000 in a regular IRA to a Roth IRA, can I apply the losses from the mutual fund sale toward paying taxes when I transferred the regular IRA to a Roth IRA?


ANSWER


Expert Eugene Jaspan's Answer:

Possibly, selling mutual funds is a capital loss, which has nothing to do with transferring funds from a regular IRA to a Roth IRA.  You can take the losses from the mutual funds and offset them against any capital gains you might have.  Anything left over can be taken as a loss up to $3,000.00 per year and can be carried forward each year until the full $10,000.00 is used up.  If you transfer $50,000 from a regular IRA to a Roth IRA, you are going to have taxable income of $50,000 if you do it all at once.  If you transfer $3,000 per year from the Regular IRA to the Roth IRA, for the first 3 years you wouldn't feel any additional income as it would be offset by the $3,000.00 capital loss above. 

Eugene Jaspan, CPA

New Jersey

24 yrs experience

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