Should I move my investments to an IRA?

I am 56 years old and have $25,000 in a fully taxable brokerage account. Most of the holding's are good dividend stocks which have increased in value. However, potential capital gains are currently modest. I'd like to shift most of this wealth into my Roth and/or standard IRA. I assume this involves selling the stocks and funding my Roth with some of the proceeds. This would take several years. Is there a better way? I'm not sure how I would shift anything to my standard IRA. I'm also torn as to making this shift (for asset protection and lower future taxes) at the expense of not making new contributions to my IRA's.

Investing, IRAs
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September 2017

If your primary goals are creditor protection and minimizing tax drag, you may have a couple of options.

You can, of course, periodically sell an appropriate proportion of your brokerage holdings, pay any capital gains taxes, and utilize proceeds to contribute to your Traditional IRA or Roth IRA up to the maximum allowable contribution. You will want to be aware of the income thresholds that stipulate the deduction limit for your Traditional IRA and contribution limit for your Roth IRA. Of course, you will also want to make sure that you fully understand the tax consequences of any asset sales.

If you are single, this method would presumably take several years to accomplish a full transition of your brokerage funds into IRAs. If enacting these transactions would take the place of contributions you are already making into your IRAs, this strategy might not make as much sense. That is, unless you decide to consume the dollars that would have otherwise been contributed to your IRAs, a proportional amount of your savings will probably still end up in taxable investment vehicles, negating the effects of the transfers.  

If you are married, and your spouse is not already contributing to an IRA up to the contribution limit, you may be able to contribute to an IRA on behalf of your spouse, even if your spouse does not earn any income. On a household basis, this would potentially allow you to transition your brokerage account funds into an IRA while continuing to make your regularly scheduled IRA contributions.   

If you have a retirement plan at work (like a 401k, for example), that you aren’t already maxing out – and because money is fungible – you could begin to contribute more to your retirement plan, and utilize the proceeds from the brokerage account to replace the income withheld from your paycheck to fund the retirement plan, if necessary. Depending on the type of plan, and the taxable position of the brokerage holdings, this could potentially result in a net tax wash, or better. It might also allow you to more rapidly accomplish your goal of transitioning assets in the amount of those held in brokerage to a creditor protected account with less tax drag (The zip code on your question is from CT. CT provides creditor protection to 401k assets, as they do for IRA assets.).

If you are self-employed, you could also establish your own retirement plan and potentially accomplish the same strategy as the one just described.

Really, you have some other options, too; but they, like these, will be highly dependent upon your personal circumstances. So, you might have a few different options to accomplish the goal you have described, but the best path is going to depend on several personal factors.

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