Selling Shares from Investment Account (eTrade) to Roll into IRA Account

[Infernaldevice98]

Hello,

Trying to understand Tax implications of having transferred my investments from eTrade to an IRA account with Fidelity.   I received a 1099-B that shows gains, but these funds were transferred directly from eTrade to Fidelity IRA.  Do I need to pay taxes on the gains?

[DianeW777]

Yes, you must pay taxes on the gains. This answer assumes the eTrade account was not a traditional IRA.

When the stocks were 'transferred' they actually sold the stock and transferred the proceeds. For this reason the gains must be taxed and then you may be able to take a deduction for the money you put into the IRA.  Keep in mind that the amount you are limited on the amount you are allowed to put into an IRA each year.

For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year
  • IRA Deduction Limits (Traditional IRAs only- click the link that applies to you)
  • Where do I enter my IRA contributions?

[Infernaldevice98]

DianeW777 Thank you for the answer.  Makes sense.

Cheers,

[dmertz]

To elaborate on what DianeW777 said, you did not do a rollover.  You used the cash that you received from the sale of your investments to fund a new, regular contribution to the IRA.  If Fidelity instead recorded this as a rollover contribution, you have a problem that needs to be fixed so that Form 5498 that Fidelity issues for this IRA is correct.