Settled Cash in Brokerage Account

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goldenBorder
Posts: 23
Joined: Mon Feb 06, 2017 10:46 pm

Settled Cash in Brokerage Account

Post by goldenBorder » Fri Dec 15, 2017 10:42 am

I have cash (core) in my taxable brokerage account. I'm not sure where it came from. Are there tax consequences to moving that to a Roth?

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Settled Cash in Brokerage Account

Post by dbr » Fri Dec 15, 2017 10:52 am

goldenBorder wrote:
Fri Dec 15, 2017 10:42 am
I have cash (core) in my taxable brokerage account. I'm not sure where it came from. Are there tax consequences to moving that to a Roth?
That cash would be dividends and capital gains distributions from your holdings. You can contribute that money to a Roth the same as any other contribution to a Roth of money you have. Those distributions will appear on your 1099 as taxable income. You might want to review whether you reinvest distributions or take them in cash be default.

It could be possible to get other money in your settlement account if it is the proceeds of a sale or if you simply transferred money into the account.

It is also possible that some other transaction you broker thinks they needed to do could account for that money.

You should read what they report for transactions in your accounts for clues.

livesoft
Posts: 61429
Joined: Thu Mar 01, 2007 8:00 pm

Re: Settled Cash in Brokerage Account

Post by livesoft » Fri Dec 15, 2017 11:01 am

goldenBorder wrote:
Fri Dec 15, 2017 10:42 am
I have cash (core) in my taxable brokerage account. I'm not sure where it came from. Are there tax consequences to moving that to a Roth?
Yes, there are definitely tax consequences to moving that to a Roth. It would be considered a Roth contribution, so if you have already made your maximum allowed Roth contribution, then you would have to deal with undoing that or pay an excise tax each year until you did get it undone.
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dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Settled Cash in Brokerage Account

Post by dbr » Fri Dec 15, 2017 11:33 am

livesoft wrote:
Fri Dec 15, 2017 11:01 am
goldenBorder wrote:
Fri Dec 15, 2017 10:42 am
I have cash (core) in my taxable brokerage account. I'm not sure where it came from. Are there tax consequences to moving that to a Roth?
Yes, there are definitely tax consequences to moving that to a Roth. It would be considered a Roth contribution, so if you have already made your maximum allowed Roth contribution, then you would have to deal with undoing that or pay an excise tax each year until you did get it undone.
Yes, exactly. Note I also used the word contribution in my post. I don't think there is any such thing as "moving" money to a Roth though probably one can move money from one Roth account to another Roth account, maybe.

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