A few things to consider and discuss with your investment advisor(s) concerning IRA’s: (this is a possible silver lining for those that it could be applicable to, call if you wish to discuss.)
1)If you are receiving or about to receive required minimum distributions from your IRA accounts;
Planning tips to consider:
- You can take it in cash or in-kind assets such as stock. The values of stocks are low currently. If you take it in stocks that will appreciate later; you can convert this growth to capital gain (one year holding period) by taking stock. This assumes you have enough cash to pay the taxes on the distribution. The basis you would have in this stock is the value at the distribution date measured against the sales price when you sell the stock(s).
- The growth of the stock being outside the IRA now in your personal name also has estate planning consequences in that the value of date of death. So, beneficiaries of your estate will benefit if the stock are held for lifetime.
- If you sell the stock within one year it will be subject to the short-term capital gain rules. The gain if any can be offset by other capital losses.
2)The current losses in your IRA portfolios present in my opinion an unprecedented opportunity of our lifetime. The money in your IRA is going to be taxed at ordinary rates when distributed. If you are over 59 ½ you make distribute without any penalties. The distribution would be subject to tax.
3)If you distribute the stock to yourself individually you would pay tax on the value of the stock at the date of the distribution. This value then becomes your basis and the holding period to be treated as a capital gain on the sale is one year from that date.
4)If you converted to a Roth by transferring stock you have the same treatment in the transfer, but there will never be taxes paid ever again on the money in the Roth and the growth of the value in the Roth based upon current tax law. There are no RMD requirements and the Roth can pass to future generations with the same benefits.
We are not advising you how to invest, but this could be a good time to visit with your investment adviser on these points above.