Go to Jeff Salisbury LWGate Home Page.From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Stocks in IRA accounts
Date: Fri, 4 Sep 1998 09:47:09 -0400
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[Disclaimer: this is my opinion, not advice. I am not a professional.] >I am thinking about opening a Roth IRA with a broker and purchasing >individual stocks with the contributions. The broker who told me that I can >contribute $2000, but my actual stock purchases cannot be for the whole >$2000 since I have to include the commissions in the basis. This doesn't >make sense. With my mutual fund IRAs, I purchased $2000 in fund shares and >sent a separate check for the annual maintenance fee. If I were to make Your broker is correct. You cannot pay IRA trading commissions from outside of the IRA. If you do, the payment will be treated as an IRA contribution. You'll note that if you buy load funds, the same things happens if you try to pay the load with non-IRA funds. Annual custodial fees are an entirely different animal than commissions. If you don't like it, blame Congress for writing the tax law the way it did. I note that even in taxable accounts, commissions and account fees are treated differently. Account fees can be deducted currently as a miscellaneous investment expense, subject to the 2% AGI floor. Commissions may not be deducted currently and instead are capitalized into the basis of the security. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - -
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