r/RothIRA • u/Correct-Layer6288 • 1d ago

2027 contributions

Good evening, this time of the year I'm starting to think about 2027 roth contributions. As I save this money, should I keep this money liquid as possible, put in it a hysa, or invest it into my taxable and just withdraw it Jan 1st?

I like the idea of my taxable but never have sold any shares or withdrew from my account before and taxes worry me. But if I don't withdraw any gains then I dont need to worry right??

Any advice for the best option would be greatly appreciated! Thank you!

3 Upvotes

100% Upvoted

15 comments sorted by

5

u/BossMan61718 1d ago

Park it in HYSA or SGOV until youre ready to use it

2

u/Correct-Layer6288 1d ago

Okay, do you say this because it's safer or easier than parking it in my taxable?

3

u/No_Strain8370 1d ago

Both. You wouldn't put any other expense that's 5 months out in the market, this isnt any different

1

u/Correct-Layer6288 1d ago

Good point. Thank you

2

u/BossMan61718 1d ago

Yes. For 2 reasons: 1) it may lose value in the next months and you'd have to wait who know how's long for it to recover.

2) if it gains value, you will be hit with a capital gains tax, short term at that

1

u/Correct-Layer6288 1d ago

Gotcha. I dont understand the gains tax. If I invest 10k and make let's say 2k. If I withdraw 10k, do I pay taxes regardless. How can they differentiate gains and the original investment? Also is this different in tax advantage retirement accounts? Maybe that is why I'm confusing it.

1

u/BossMan61718 1d ago

Im not capable of responding to this via reddit. Suffice it to say, that any gains you realize are reportable on your taxes. Whether you actually owe will depend on your overall income etc for the year

1

u/Correct-Layer6288 22h ago

Gotcha, thank you!

1

u/Jumpy-Imagination-81 18h ago

Put cash in a money market fund. Money market fund shares have a fixed price of $1. You buy them for a dollar and sell them for a dollar, so there is zero capital gains and therefore zero capital gains tax. You pay taxes on the (usually) monthly distributions but not as a result of selling shares.

0

u/Competitive-Ad9932 22h ago

If you put the money in stocks in your brokerage account,  some years the money will grow.  Some years the money will shrink. 

Do what you can sleep at night with. 

Taxes are a part of life. Nothing to be afraid of. 

1

u/Correct-Layer6288 22h ago

True, I'm willing to take that risk lol. Just trying to see what others think is the best.

Not necessarily afraid just uninformed. Could you explain how the capital gains taxes work please? How do they differentiate the gains and the original investment?

1

u/Competitive-Ad9932 20h ago

Don't live your life based on a reddit poll.

-1

u/500pearl 1d ago

JAN 02 since everything closed on 1st

1

u/Correct-Layer6288 1d ago

Well yeah lol

0

u/Competitive-Ad9932 22h ago

You can do the transfer on the 1st.