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QUESTION DETAIL
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Can you contribute mutual fund shares to a traditional or roth IRA? Specifically, if you have 2,000 shares of ABC mutual Fund that has a cost basis of $2.00 when you purchased them in 2008, but share are currently trading at $5/share and you transferred $1,000 to a traditional IRA, what would be the tax consequence? Any difference for Roth IRA?
ANSWER
The BIDaWIZ Team's Answer:
You cannot in itself transfer mutual fund shares into an IRA. As per IRC Section § 219(e)(1) and IRS Publication 590, you may only contribute cash into an IRA. If you wanted to contribute $1,000, you would have to sell those securities and there would be a realized event.
