What to Do With a Poor Performing Roth IRA?
Roth IRAs are retirement accounts that offer tax benefits. Anyone whose adjusted gross income does not exceed the annual limits set by the IRS can contribute to a Roth IRA.
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Considerations
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You can choose how you want to invest the money in your Roth IRA and you are free to change that decision at any time. The only prohibited investments are collectibles, such as dolls or stamps.
Changing Investments
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If you want to move your money to a different investment, such as from one mutual fund to another or to a money market account, you can perform a direct rollover by contacting your financial institution and informing them of your decision. You are free to move the money to an account at the same financial institution or to a different institution.
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Self-Directed Roth IRA
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If you decide that you want to have complete control of your Roth IRA rather than investing in mutual funds, you can start a self-directed Roth IRA where you will pick your individual investments such as stocks, bonds or real estate.
Cashing Out for a Deduction
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If you cash out your money from your Roth IRA and the amount of all of your distributions is lower than the total of your contributions, you can claim an itemized deduction based on your losses.
Warning
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If you cash out your Roth IRA before you reach age 59 1/2, even if it is only to claim the tax deduction, you will have to pay a 10 percent penalty on any earnings and include the earnings as taxable income.
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