Investment and tax question
Results 1 to 4 of 4
  1. #1
    Legend
    Points: 174,241, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 3.0%
    Achievements:
    SocialVeteran50000 Experience Points
    alaskaguy's Avatar
    Join Date
    Apr 2006
    Posts
    10,204
    Points
    174,241
    Level
    100
    Thumbs Up
    Received: 6
    Given: 1

    Investment and tax question

    I had a Roth IRA invested in the direxion Dow Bull 1.25X fund. This particular fund was liquidated on 11/14/2008.

    I received a check for the net proceeds this weekend. The confirmation statement describes the withdrawal as a premature distribution and withheld a chunk of money for the IRS.

    The investment firm, direxion made the decision to close the fund. Why didn't the contact me and give me the opportunity to roll the funds into another fund? Why should I be dinged with withholding on this account when I had no intentions of redeeming the shares?

    My plans are to reinvest/transfer the proceeds into another fund. But I'm steamed that I was subject to withholding. Why should I be subject to withholding when I did not request the redemption?


    "If the facts don't fit the theory, change the facts." Albert Einstein
    "If your worried about falling off the bike, you'd never get on" Lance Armstrong
    "Dress cute wherever you go, life is too short to blend in." Paris Hilton
    "Money is one of the greatest instruments of freedom ever invented by man." F.A. Hayek

  2. #2
    Burgermeister!
    Points: 362,259, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 6.0%
    Achievements:
    SocialVeteran50000 Experience Points
    TykeClone's Avatar
    Join Date
    Oct 2006
    Posts
    23,240
    Points
    362,259
    Level
    100
    Thumbs Up
    Received: 425
    Given: 881

    Re: Investment and tax question

    (I'm going without my cheat sheets here)

    If you invest the gross amount (net proceeds + tax that was withheld) into another fund under a Roth IRA, you should be able to get those withheld taxes returned to you - as long as you reinvest withing 30 (?) days.

    If you've held the Roth for more than 5 years, the principal that you put in should be able to be distributed tax free regardless of your age - and if the proceeds were less than your principal, you should not have had a tax event.



    This article seems to sum up the rules appropriately: Tax Treatment Of Roth IRA Distributions



  3. #3
    Speechless
    Points: 343,854, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 21.0%
    Achievements:
    SocialVeteran50000 Experience Points
    ISUFan22's Avatar
    Join Date
    Apr 2006
    Location
    Grimes, IA
    Posts
    32,663
    Points
    343,854
    Level
    100
    Thumbs Up
    Received: 602
    Given: 369

    Re: Investment and tax question

    Quote Originally Posted by TykeClone View Post
    (I'm going without my cheat sheets here)

    If you invest the gross amount (net proceeds + tax that was withheld) into another fund under a Roth IRA, you should be able to get those withheld taxes returned to you - as long as you reinvest withing 30 (?) days.

    If you've held the Roth for more than 5 years, the principal that you put in should be able to be distributed tax free regardless of your age - and if the proceeds were less than your principal, you should not have had a tax event.



    This article seems to sum up the rules appropriately: Tax Treatment Of Roth IRA Distributions
    This is my understanding as well. Just be sure the new institution codes the transaction as a rollover.



  4. #4
    Legend
    Points: 174,241, Level: 100
    Level completed: 0%, Points required for next Level: 0
    Overall activity: 3.0%
    Achievements:
    SocialVeteran50000 Experience Points
    alaskaguy's Avatar
    Join Date
    Apr 2006
    Posts
    10,204
    Points
    174,241
    Level
    100
    Thumbs Up
    Received: 6
    Given: 1

    Re: Investment and tax question

    Thanks for the feedback.

    Now I need to decide where to reinvest the proceeds.


    "If the facts don't fit the theory, change the facts." Albert Einstein
    "If your worried about falling off the bike, you'd never get on" Lance Armstrong
    "Dress cute wherever you go, life is too short to blend in." Paris Hilton
    "Money is one of the greatest instruments of freedom ever invented by man." F.A. Hayek

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
  • TV: Cyclones.tv
  • HOOPS: Iowa State vs. Mississippi Valley State
  • December 31, 2014
  • 06:00 PM