| p>When you turn age 70½, you need to | | | | But if you expect those stocks or equity funds to |
| take a an IRA distribution each year. But if you | | | | appreciate, but you need to take your IRA |
| don't need the cash to live on and you expect | | | | distributions, and you don't need the cash for living |
| your the stocks in your IRA to increase in the | | | | expenses, you can capitalize on that future |
| future, consider taking an 'in kind' IRA distribution | | | | growth at a much lower capital gains tax rate. Do |
| for improved tax benefits. | | | | this by taking an 'in kind' IRA distribution--remove |
| Market declines have reduced the value of your | | | | the shares form your IRA. There is no |
| stocks. Their lower values have decreased the | | | | requirement to cash them in first. |
| IRA value. Since this year's required distribution is | | | | Take an 'in kind' IRA distribution by having your |
| based on a higher IRA value at the end of | | | | IRA custodian send the shares directly from your |
| previous year, you pay tax on an annoyingly large | | | | IRA account to a taxable account. Maintain |
| IRA distribution for 2008 (based on the 12/31/07 | | | | records on the value of that stock on the date of |
| value). To give tax payuers relief in 2009, IRS has | | | | transfer as this is your new tax basis. It's on that |
| waived the IRA minimum distributions (but not for | | | | value that you'll have to pay ordinary income tax |
| 2008). | | | | as an IRA distribution. |
| Stocks or equity funds you bought in your IRA | | | | If the shares appreciate in the future: |
| have no tax basis. Whatever value you take out | | | | · gain will be subject to the lower long |
| for your IRA distribution is taxed at ordinary | | | | term capital gains tax - and that's for gain above |
| income tax rates (up to 35% federal). And that | | | | its new basis. |
| includes all gains on those equities. | | | | · you don't pay any tax on any gain until |
| Keeping those depressed equities in your IRA for | | | | you wish to sell the shares |
| a possible comeback will have you paying ordinary | | | | Lastly, if the shares fall further and you decide to |
| income tax rates when you take them out in the | | | | sell, you take a capital loss deduction and use it to |
| future for both their value and any gains. That's a | | | | offset other tax on other income or IRA |
| negative tax consequence of IRAs for | | | | distributions. You would not have been able to do |
| appreciating stocks and equity funds. | | | | so had the shares lost value inside the IRA. |
| Use an In Kind IRA distribution To Save Taxes | | | | |