Taxes, losses and your IRAs

Q: If I sell a stock that’s in my Roth IRA for a loss, can I deduct the loss when I eventually withdraw money from the account? — R.T., Richmond, Calif.

A: Sorry. You can deduct investing losses generated through regular brokerage accounts, but IRA accounts work differently. If you follow the rules, you’ll pay no taxes on your Roth withdrawals, but you’ll also get no tax benefits from losses. Imagine investing $5,000 per year in your Roth and earning an average annual gain of 8 percent. In 25 years, you’d have more than $360,000, and you’d be able to take it all out tax-free!

Traditional IRAs work a little differently, offering you an upfront tax break by letting you shrink your taxable income by the amount of your contribution. They, too, don’t permit deductions for losses