Anonymous
Anonymous asked in Business & FinanceInvesting · 5 months ago

Is it possible to transfer money from brokerage to Roth IRA?

I began investing about a month ago and have contributed money into a taxable brokerage account. After learning more about investing and my goals, I decided to make a Roth IRA and planned to transfer my holdings to it. 

After researching into a Roth IRA more, it's not looking like I can transfer any of my money from my taxable brokerage over even if I were to sell everything and have the money in cash. The money in my brokerage account is primarily from COVID-19 unemployment benefits. My question is am I able to somehow put my brokerage account money into my Roth IRA? I believe I am only able to do $5,500 since I am 19 years old. What would happen if I were to put more than $5,500 into my Roth? 

I would appreciate a response from someone who legitimately knows what they're talking about and can give a detailed answer, thanks.

2 Answers

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  • 5 months ago
    Favourite answer

    No.

    You can not contribute investments to an IRA.

    You can only contribute cash.

    You would have to:1)  Sell all or part of the investments;

    2)  Deal with the tax consequences;

    3)  Contribute up to $6000 to the IRA; and,

    4)  Purchase investments inside of the IRA

    There is a 6% penalty every year if you over-contribute to an IRA.  For example, if you somehow contribute $7000 to an IRA, you would be penalized $60 ($1000 x .06) every year that the excess remains in the account.  Most IRAs will not let you over-contribute.  They will stop you at $6000.Also, to contribute to any IRA, you must have "earned income" which is income from working.  Unemployment doesn't count.  However, earned income from earlier or later in the year would count for 2020.

  • fcas80
    Lv 7
    5 months ago

    You can withdraw money from your brokerage account whenever you like.

    You can contribute up to $6000 per year into a Roth, but you must have EARNED INCOME for the amount you contribute.  Unemployment benefits are not earned income.

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