Do I have to pay taxes on my Stash Retire investments?
You are required by the IRS to report income earned from capital gains and other applicable distributions. This means you will need to pay taxes on money you make through capital gains, dividends, and income interest.
To put it another way: If one of the funds in your portfolio increases in value, and you sell that investment at a higher value than you bought it at, you’ve made some money—that’s considered income. You’ll need to pay taxes on that income as well as income from dividends and interest earned from debt investments.
However, if you are contributing post-tax dollars to your Stash Retire Roth IRA and you keep it in there until you’re 59 ½, you don’t need to worry about these fees and taxes.
For Roth IRAs
For more information on Roth IRAs, check out this article.
Generally, you will not pay taxes on money you withdraw from your Roth IRA after the age of 59 ½. If you choose to withdraw $10 or more from your Stash Retire Roth IRA before you are 59 ½, you may be subject to penalties and/or taxes.
There are certain circumstances that could lead to you facing additional penalties from the IRS for withdrawing money from your Roth IRA. You may find yourself facing penalties if:
You are withdrawing money from your Roth IRA and are under the age of 59 ½.
You are withdrawing more money from your Roth IRA than you’ve contributed.
You are withdrawing more than the total amount of money you contributed to your first Roth IRA within the first five years of opening it.
Please consult a tax professional for guidance on your specific situation.
For Traditional IRAs
For more information on Traditional IRAs, check out this article.
Generally, you will not pay taxes on money you are putting into your Traditional IRA. You will owe income taxes on the amount of money you are withdrawing from your account at your ordinary tax rate.
Additionally, the IRS requires you to begin taking Required Minimum Distributions (RMDs) from your account beginning at age 70 ½.
This should not be construed as tax advice. Stash does not monitor whether a customer is eligible for a particular type of IRA, or a tax deduction. Please consult a tax professional for additional questions.
Roth IRA: Withdrawals of the money (Contributions) you put in are penalty and tax free. Prior to age 59½, withdrawals of interest and earnings are subject to income tax and a 10% penalty. All earnings are tax free at age 59½ or older, assuming your first contribution was more than 5 years prior. Income Eligibility applies.
Traditional IRA: Withdrawing prior to age 59½, generally means you’re subject to income tax and a 10% penalty. Withdrawals after age 59½ are only subject to income tax but no penalty.
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