| I got an IRA distribution |
You can take a distribution from your
Traditional Individual Retirement
Account in the form of either cash
or investment securities.
Taking your distribution in the form
of stock is an efficient way to move
high growth, low dividend assets out
of your IRA into your individual account
so that future appreciation will be taxed
at capital gain tax rates rather than
marginal ordinary income tax rates.
|
|
Any time there is a stock market decline (such as our recent stock market
experience) is an ideal time to take an IRA distribution of a stock that is severely depressed.
You pay tax on only the current low fair market value. The subsequent rebound in value will
be taxed at the more favorable capital gains rates rather than the ordinary marginal
rates that will eventually apply to all gains inside the IRA when you take future
distributions.
If you choose to take a distribution in the form of stock, your cost basis per share
is the average trading price on the date of distribution from your Traditional IRA.
This is the amount that will be reported to you as taxable income from IRA
distributions on your Form 1099-R at the end of the tax year.
If you choose to take your distribution in the form of a bond, note, or mutual fund
shares, the same principles apply. Your cost basis after the distribution will be the
average trading price for the bond, note, or mutual fund shares on the date of the
distribution.
|
|