Hello,
I am 35. I closed my Roth IRA this year due to substantial losses.
Approximately speaking, I contributed $50k over my lifetime, and the account was worth $2k this month. I went ahead and closed my Roth IRA on December 26th, 2021, and transferred the money to my checking account. Thus, at this moment on Dec. 28th, 2021, all my IRAs are closed and I have a $0 balance. My intention is to claim ~$48k in losses on my 2021 tax return.
My question: When am I allowed to make my 2022 Roth IRA contribution and re-open a new Roth? I read that all my accounts must be closed to take the deduction. But I am ready to start over, and I can't find the precise answer. I.e. can I open a new Roth IRA in January and make both 2021 and 2022 contributions for $12k, or does the loss I'm taking in 2021 prevent me from making a 2021 contribution? Or do I need to keep the account closed until after I file in April?
Thanks so much
Unfortunately you can no longer (after2017) deduct your loss from your IRA.
Yes - You can still fund a Roth IRA, as long as your contribution is sent in before the official tax deadline. For the 2021 tax year, for example, that means all contributions made before April 15, 2022, could go toward 2021's Roth IRA contribution limit.
As Bsch4477 mentioned above, there is no allowable deduction for this loss as of 2017.
"My intention is to claim ~$48k in losses on my 2021 tax return. "
If your contributions were pre-tax, you cannot deduct any losses from thta. In fact your 2K will be treated as income. Yeah, I know, that is the catch with traditional IRAs. You cannot lose money in them
@Serge The OP has only talked about ROTH contributions/distributions not a Traditional IRA.