Closing a Money Losing IRA
Discusses how to close a money-losing Roth IRA and take a capital loss.
FeedbackBy Preston Hunt, 23 February 2003
Like everybody else in the country, my investments are all in the toilet. In particular, my Roth IRA is in terrible shape, mostly due to several high-risk investments I made in the telecom sector. I bought these companies (Northpoint, Covad, Redbook, etc.) in my Roth because I was expecting huge returns and didn't want to pay taxes. Ahhh, the irony.

In any event, it looks like you can close your Roth IRA out completely and take a loss as a miscellaneous deduction. The only gotcha is that there is a deductible of 2% of your adjusted gross income, which means that your losses have to be greater than 2% of your adjusted gross income to make this worth it.

Publication 529 from the IRS is the authoritative source on what you can and can't do.


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