No!
Maybe. You cannot move them to the Roth.
Is there any way you can sell them back to the issuer and then buy them
again in the Roth? If so, it would be a reportable transaction on your
income tax return, but if the price/value hasn't changed since you bought
them, there would be zero effect on your taxable income.
I offer this without any knowledge of exactly what the restrictions are.
It's simply the only way I can think of for doing the purchase in the Roth.
--
Phil Marti
Clarksburg, MD
No. Contributions to your Roth IRA or traditional IRA can only be made
in CASH (unless transferred from another IRA or qualified retirement
plan).
Yes: The Internal Revenue Code. That would be self-dealing.
Seth
What is self dealing about it. I paid X amount for the shares and
would resell the shares for X amount.
>> >A few months ago I purchased 144 restricted shares. It recently
>> >occurred to me that another tact was to purchase them with my
>> >Roth/IRA funds. Is there anything to prevent the transfer of
>> >these 144 restricted shares into my Roth/IRA and pulling out
>> >liquid cash.
>>
>> Yes: The Internal Revenue Code. That would be self-dealing.
>
> What is self dealing about it. I paid X amount for the shares and
> would resell the shares for X amount.
Self dealing doesn't have to mean unfair.
In this case you could alternatively sell your stock on the open
market, and have your IRA buy the same number of shares in the
market, at the same price. If that price was less than what you
originally paid for the stock, you would not be allowed to take the
tax deduction because of the "wash sale" rules that disallow
deductions for stock losses if you repurchase the same investment
within 30 days of when you sell it.
There are in addition specific restrictions against what kinds of
transactions you are entitled to have with your own IRA. For example
you are not allowed to borrow money from it.
There might be (though I have not checked to see if there is) a
restriction that says you can't sell stocks to your own IRA, perhaps
out of the fear of the attempt to get money out of the IRA without
the tax penalty by selling the stock for more than it is worth.
Stu
Not a good idea.
You don't say who/what/why you purchased these restricted shares.
Most likely they contain a lot of risk and are not a good investment
vehicle for your IRA.
At the same time, you're trying to to a wash sale, and this could
violate the terms of the initial share sale.
You are trading with yourself, not in the market. That'e self
dealing.
You are selling to your IRA. They're both you.
> I paid X amount for the shares and
>would resell the shares for X amount.
And what if the value of the shares were 10X at the time? That sounds
like a way to put excess money into your IRA. Or, if it were 0.1X, a
way to take money out without being taxed.
Seth
>In this case you could alternatively sell your stock on the open
>market,
No; that's the idea of "Section 144A restricted stock." It cannot be
sold on the open market.
> and have your IRA buy the same number of shares in the
>market, at the same price.
In any case, even if the stock were trading publicly, you can't
guarantee the same price.
Seth
I agree this would be a major no-no, but for a different reason:
You and your IRAs are related parties.
>> I paid X amount for the shares and
>>would resell the shares for X amount.
>
>And what if the value of the shares were 10X at the time? That sounds
>like a way to put excess money into your IRA. Or, if it were 0.1X, a
>way to take money out without being taxed.
>
>Seth
>
>
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
>>>What is self dealing about it.
>>
>>You are selling to your IRA. They're both you.
>
>I agree this would be a major no-no, but for a different reason:
>
>You and your IRAs are related parties.
But I can sell to a related party (e.g. a corporation I control)
perfectly legally. It's only IRAs and a few other cases that are
specifically prohibited.
Seth
Exactly. Your IRA cannot invest in holdings of a related party.
That doesn't seem relevant to the earlier discussion. The stock in
question isn't of an entity related to the IRA, only the counterparty
in the transaction would be.
IRAs are specifically prohibited from (both) doing transactions with
related parties, and investing in related parties (even if the
investment is purchased from a non-related party).
Seth