How to Sell a Roth IRA
A Roth IRA account cannot be sold itself, but the securities within can be liquidated or transferred. Once you have moved the securities out of your account, you can close your Roth IRA and consider it "sold." There are three main ways to close out your Roth IRA account, and each one accomplishes a significantly different goal, so it is important to explore all of your options before you decide to shut down your Roth.
Other People Are Reading
Instructions
-
-
1
Determine your objective. You opened the Roth IRA for a reason, most likely for its tax-advantaged status, so it is important to determine what you want to accomplish with your funds before you close out your Roth. If you are in retirement and simply want to use your funds, you can withdraw the money in your Roth tax-free and use it as you see fit. If you are unhappy with your current Roth trustee, you can do a trustee-to-trustee transfer to another Roth provider and maintain the tax benefits of a Roth without the transfer being taxed. If you converted a traditional IRA into a Roth and have now decided that you don't want to pay tax on that transfer, you can "recharacterize" your Roth back into a traditional IRA, within certain parameters, in effect undoing the original transfer. Since the calculations for recharacterizations can be difficult, you should consider consulting a tax adviser for this option.
-
2
Establish the appropriate accounts. While you are free to liquidate, transfer or close a Roth IRA at any time, you must have another account open to receive the funds. Once you have determined your desired course of action, open either a taxable, Roth IRA, or a traditional IRA account. Any bank or financial institution should be able to help you with both opening your account and making the transfer.
-
-
3
Do your taxes. Any time you move money out of an IRA, you will receive a 1099-R form at the end of the year. The 1099-R lists the total amount of your IRA transfer and should indicate whether the amount is taxable or not. In the case of Roth distributions, this amount should generally not be taxable; in fact, in the case of a recharacterization, you should receive a tax benefit.
-
1
Tips & Warnings
Recharacterizations generally must occur by Oct. 15 of the year following the original conversion.
