IRA question: If your stocks go down in value, can you add more money before the end of December?

I recall there being a FW thread about this around 2009. Anyone know if this is still allowed?

Also, is there a name for this?

This is the response wiki post. You can edit this out for your response.

Not easily, but you can negate it by funding another brokerage (In rare cases you can even do the same brokerage, but most block you once you hit your annual cap)

Then call up your first brokerage and ask them to help you with removing excess contributions

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I can’t imagine there would be any way to do this. The limit is on contributions … money that you move into the qualified account. The value of the account is irrelevant.

If you had, say, $5000 in excess contributions, you’d actually have to remove $5000. Interesting question, though, about what happens if there is no longer that much value in the account. My guess is that you’d take out what’s there and pay penalty on the rest.

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You can remove your contribution and all the associated earnings and “undo” the contribution. In the case of a loss, you would just take out what’s left. In the case of a gain, you’d be taxed like ordinary income on the excess gains that come out too. In either case, you could then contribute to another IRA if you wanted. I forget if the deadline for this is your tax filing or the calendar year, probably the former given how IRA contributions tend to work.


You can do as xerty suggested and “UNDO” the contribution. Then it is like you never made it. However you need to be very specific when giving instructions to the broker that you are undoing THHIS yrs contribution. Otherwise they will just assume you are withdrawing funds which would not allow you to contribute again this yr.

You may want to think about if you really want to do this. The benefit of a TIRA (I’m assuming it is traditional you are talking about…if Roth may be different) is the tax deduction and the tax deferred growth. If your stock went down,
you will get your deduction regardless so no benefit to withdrawing and recontributing. You get tax deferred growth but end up paying ordinary income tax rates when withdrawing. If you leave the money you want to recontribute in a taxable account w/ efficient index funds, you get something a bit worse than tax deferred growth because of tax drag on the distributions but you do get capital gains rate when you withdraw which can compensate for the tax drag. In the end,
they may be similar results or the taxable account could also win so doing nothing but investing the spare $$ in a taxable account may do as well.

Found this on bogleheads:

“The gist of it is you’re going to open two Roth IRAs simultaneously and take completely opposite positions in the two. You will use a complex options strategy to make it very likely that one account will go broke while the other doubles in value. You will then “undo” the contribution to the loser account, while leaving the winning account intact. A contribution can be undone by simply contacting the broker who will return to you your original contribution plus any earnings or minus any losses. Once undone it’s like you never made the second contribution so you just have one account with double the yearly contribution limit. The contribution limit for 2013 is $5,500 so the winning account will have $11,000. If that’s all you want to do you stop, otherwise continue”

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The reason I’m asking is because I invested 5500 in Rite-Aid stock in my IRA this year. That $5500 is now worth less than $2000.


Ask your broker to remove your 2016 contribution, which will get you the $2000 or whatever out. Then you can recontribute a new $5500 and hopefully do better this time. That rite aid situation did suck.

That sucks. My IRA has a total stock index fund and international index fund and they did really well.

Can you go into more detail in doubling Roth contribution. I’m told no options in roth

You can get limited option trading for your IRA if you ask and answer some suitability questions, but you cant make short bets easily so it’s hard to accomplish the outcome Teddy was quoting with regular exchange traded options. You can do plenty of risky things with options of course, but it’s hard to guarantee one will win when the other loses in similar amounts.

See: Roth IRA Horse Race for details behind this strategy.

I’m guessing your intention was to point to a specific Roth investment strategy that is somewhere in that post (which, I admit, tl;dr). Unfortunately, the statement that was featured in the link here referred to a strategy of converting IRAs to multiple accounts, and then recharacterize some of the accounts based on performance later. This strategy no longer applies as of 2018.

You can still cancel and withdraw what’s left of your contribution, and then make a new one. Basically, eat your loss and try again. It’s a good idea I find you’re willing to do the paperwork, but one you hope you’re not in a situation to make use of.