Figuring IRA Dividends

Figuring IRA Dividends at Tax Time

It’s a trick question. Never include your Roth or Traditional IRA dividends at tax time. This is an easy mistake to make, especially if you receive all your dividend information on one statement. IRA dividends are not taxed each year. Traditional IRA dividends are taxed as ordinary income with your principal and any gains when you retire and take distributions. Roth IRA dividends are not taxed at all, since the money you use to fund your account is an after tax contribution.

If you do not have an IRA, now is a great time to open one. You can’t depend on Social Security or a pension alone for a secure retirement. You can open a Roth or Traditional IRA at the credit union.

*Source: Dollars, Sense, and You. Pacul Services, Inc.

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