Can I use roth IRA for day trading ? Or short term trading?
Someone told me "investment position can only be changed once every 12 months in roth IRA", I don’t really know what it mean.
Also, can I claim capital loss on tax return form if I make bad investment in roth IRA?
Thank you very much!
May 2nd, 2010 at 8:11 pm
1. The tax laws do not prohibited you from using a Roth IRA for day trading or for short-term trading. The company where you have the account might prohibit this, but the government does not.
2. The "12 month" rule is either a rule of the custodian (the company where the account is kept), not the government, or a rule limiting how often you can move the account from one custodian to another. The government does not limit how often you can buy and sell shares within the account.
3. You cannot claim any capital loss for a Roth IRA while you still have a Roth IRA. If balance in the Roth goes all the way to zero, either because of withdrawals or really bad investing, then you can close it and claim a loss. However, if you withdraw money to achieve this result, then the tax penalties for the withdrawal (which is called a distribution) may exceed the tax benefits of the loss.