Can I Sell Stocks In My Traditional IRA So I Can Switch & Buy Target Date Index Funds?

Investing
#1

Hi,

I have an old traditional IRA that my grandpa made me open a few years ago before I understood anything about IRAs (thank you PFC for the education!) I didn’t know anything about investing at the time and had a friend select some picks for me (which are 2 ETFS - VWO and SCHG). My question is do I leave them as is or sell and rebuy Target Date Index funds?

I have since opened a Roth IRA and am primarily contributing to that one though I just changed jobs and need to rollover my old 401K into the traditional IRA (how can I tell if I can roll it into the Roth or the Traditional? My assumption is it’s a traditional 401k).

Thanks!
Tori

#2

Hi Tori,
I would personally switch your funds out for TDIFs especially if it is a substantial amount of money. We love simplicity!

If it is a traditional 401k it would be better to roll it over into a rollover IRA (which is a type of traditional IRA) :slight_smile: Converting from a traditional 401k to a Roth IRA would be complicated… hope that helps!

#3

Thank you for the reply! Will do :slightly_smiling_face:

One other question I had - if I want to open a brokerage account, when are capital gains taxes taken out? Is that something I have to account for every year in my own taxes?

#4

You only owe capital gains taxes when you sell an investment, so if you’re just buying and holding you won’t owe any taxes until you sell

#5

This account is a IRA so no trading of funds would ever create a taxable event. Roth IRAs are never taxed again, Traditional IRAs pay tax on the amount withdrawn :slight_smile: