| IRAs, dividends, and taxes - help |
|
|
|
|
|
MrNewEngland
Contributing Member
Cash: $ 7.65
Posts: 36
Joined: 04 Nov 2009
Location: The QC
|
| IRAs, dividends, and taxes - help |
 |
|
I have a few questions that I hope someone out there could help me out with.
I have an IRA, but I've always put my money in mutual funds. I have just recently started buying individual stocks/equities.
I have heard that dividends from stock/funds in an IRA are taxed. Is this true?
If it is, are you still taxed if you 'reinvest' the dividend into the stock/fund?
Also, I don't get the logic behind taxing something in a tax-sheltered account. Isn't the dividend part of the stocks return? Why would that be taxed but not the growth.
Anyone have any insight on this stuff?
Craig Finn is brilliant.
|
Wed Jul 14, 2010 1:59 pm |
|
|
coaster
Senior Advisor
Cash: $ 1357.20
Posts: 6683
Joined: 11 Oct 2005
Location: Wisconsin
|
Nothing in an IRA is taxed at any time it remains in the IRA.
~Tim~
Eye Candy : Why Whimsy
|
|
Wed Jul 14, 2010 3:14 pm |
|
|
MrNewEngland
Contributing Member
Cash: $ 7.65
Posts: 36
Joined: 04 Nov 2009
Location: The QC
|
quote:
Originally posted by coaster
Nothing in an IRA is taxed at any time it remains in the IRA.
Thank you.
I got a statement from the IRA and it had all the dividends listed under "taxable" something or other...
Plus I thought I had read that the dividends were taxed somewhere else.
Craig Finn is brilliant.
|
|
Wed Jul 14, 2010 6:10 pm |
|
|
oldguy
Senior Member
Cash: $ 308.50
Posts: 1477
Joined: 21 May 2006
Location: arizona
|
quote:
I thought I had read that the dividends were taxed somewhere else.
Nope - no tax is due until you eventually start selling your IRA, then everything that ypu take out is taxed as ordinary income, no distinctions on capital gains, dividents, reinvesting, etc - just everything at one rate.
But why are you starting to buy individual stocks? (They carry quite a bit of uncompensated risk compared to your index funds).
|
|
Thu Jul 15, 2010 3:48 pm |
|
|
MrNewEngland
Contributing Member
Cash: $ 7.65
Posts: 36
Joined: 04 Nov 2009
Location: The QC
|
|
|
|
quote:
Originally posted by oldguy
quote:
I thought I had read that the dividends were taxed somewhere else.
Nope - no tax is due until you eventually start selling your IRA, then everything that ypu take out is taxed as ordinary income, no distinctions on capital gains, dividents, reinvesting, etc - just everything at one rate.
But why are you starting to buy individual stocks? (They carry quite a bit of uncompensated risk compared to your index funds).
Thanks, oldguy. If my IRA is roth, no taxes will be due regardless of the type of growth, correct?
Honestly, most of my retirement money is in high growth mutual funds (in both my IRA & 401K)... and I am just doing this because I enjoy it. Most of my money still goes towards the mutual funds but I take some of my contributions to my IRA and "play" with it. It's not enough to sink me and I try to read up and learn as much as possible... but I'll admit that I am learning as I go.
I also feel as though I have some "cushion" to do riskier stuff as I have a pension plan here at work that is low risk and stable (at least I consider it to be) and I invest a small amount in I-bonds.
Suggestions? I'm certainly open to them. Always interested in others thought & ideas.
Craig Finn is brilliant.
|
|
Thu Jul 15, 2010 5:38 pm |
|
|
MrNewEngland
Contributing Member
Cash: $ 7.65
Posts: 36
Joined: 04 Nov 2009
Location: The QC
|
|
|
|
quote:
Originally posted by MrNewEngland
quote:
Originally posted by oldguy
quote:
I thought I had read that the dividends were taxed somewhere else.
Nope - no tax is due until you eventually start selling your IRA, then everything that ypu take out is taxed as ordinary income, no distinctions on capital gains, dividents, reinvesting, etc - just everything at one rate.
But why are you starting to buy individual stocks? (They carry quite a bit of uncompensated risk compared to your index funds).
Thanks, oldguy. If my IRA is roth, no taxes will be due regardless of the type of growth, correct?
Honestly, most of my retirement money is in high growth mutual funds (in both my IRA & 401K)... and I am just doing this because I enjoy it. Most of my money still goes towards the mutual funds but I take some of my contributions to my IRA and "play" with it. It's not enough to sink me and I try to read up and learn as much as possible... but I'll admit that I am learning as I go.
I also feel as though I have some "cushion" to do riskier stuff as I have a pension plan here at work that is low risk and stable (at least I consider it to be) and I invest a small amount in I-bonds.
Suggestions? I'm certainly open to them. Always interested in others thought & ideas.
::clears throat::
Craig Finn is brilliant.
|
|
Mon Jul 26, 2010 1:25 pm |
|
|
coaster
Senior Advisor
Cash: $ 1357.20
Posts: 6683
Joined: 11 Oct 2005
Location: Wisconsin
|
quote:
Originally posted by MrNewEngland
I got a statement from the IRA and it had all the dividends listed under "taxable" something or other....
Dividends are classified as "qualified" or as "ordinary" as to what rate they're subject to income tax. "Subject" is the key word because gains and income inside an IRA are not "subject" to being taxed so long as they remain inside the IRA.
The way they're classified depends on whether or not the payor's income was taxed prior to the distribution of the dividends.
~Tim~
Eye Candy : Why Whimsy
|
|
Mon Jul 26, 2010 4:04 pm |
|
|
|
