Mutual funds in a Roth IRA: Can I.......?

Can I sell off the mutual funds now since the market is high and just have the money sit in the account until I am ready to reinvest when I feel it's a good time...say once the market is in the low of its next recession which will be a very long time.

Absolutely. One feature of the Roth IRA is that you can buy and sell all you like without paying taxes. You paid taxes on the money before you invested it in the Roth and you never have to do so again -- on the principle or on the earnings.

The same is true for a 401k or 403b -- you pay the taxes when you take the money out (as opposed to before you put the money in), but while it's in the 401k or 403b, buying and selling is free from taxes on gains.

Now, if you can tell me when the market has topped out and when it's reached a recession low, let me know. :-)

Doug

you could but I don't know if there are any tax implications in selling them plus you won't get any interest on the money just sitting there. If its too high I would look for a cheaper fund or ETF they are more tax friendly than virtually any mutual fund out there.

Actually, if the proceeds of the sale go to the IRA, then you should be fine. You should really check with your IRA custodian for exactly how to facilitate the sale though. The whole idea with the IRA is to use it as a tax sheltered investment vehicle. Investments you make with your IRA should grow the IRA. If you take any proceeds from an investment made with the IRA, before the qualifying age, then you no longer receive the benefit of the tax shelter and are penalized.

I don't who your IRA is with but if it's one of the many online brokers that pay money market rates, after you liquidate the mutual funds the cash should be earning in the 4% range. Caution, if you have held the mutual funds for less than 90 days you may have to pay an "Early Redemption Fee".

Yes, you can sell them and sit in cash. However, that's not a great idea. First, we are in the sweet spot of the presidential cycle, one of the best periods for the market. Second, predicting the market is difficult. Third, if you are uncomfortable with the risk, then switch to a less volatile fund.

Sitting in money market won't really earn enough to offset inflation losses. DON'T DO THAT!

Yes, You can sell mutual fund and just have money sitting in account.
You can put that money in IRA CD or money market fund if you are conservative investor.

-Infoman.
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