I am not a CPA, Enrolled Agent, or Tax Attorney -- so I don't give tax advice. Nevertheless, as an informed investor and self-proclaimed Covered Calls Advisor, I want to be sure you are aware of the benefits of Covered Calls investing in IRA accounts. This article from Investopedia.com (see here) briefly summarizes these advantages as follows:
IRA Advantages -- The possibility of triggering a possible reportable capital gain makes covered call writing an ideal strategy for either a traditional or Roth IRA. This allows the investor to buy back the stock at an appropriate price without having to worry about tax consequences, as well as generate additional income that can either be taken as distributions or reinvested.
For more detailed information on the tax implications of Covered Calls, I have found this article from Fidelity to be the most informative -- please read it here.
My wife and I are retired and have several IRA accounts (Traditional, Roth, and Rollover IRAs) as well as a brokerage account. We prioritize by investing only via Covered Calls in our IRAs and we re-invest our capital gains there into additional Covered Calls positions. We are fortunate that we will only need to begin taking annual taxable withdrawals from our Traditional and Rollover IRAs starting at age 72 when the current tax laws related to Required Minimum Distributions (RMDs) kicks in. (Note: if we take any future withdrawals from our Roth IRAs that will be non-taxable income). Finally, regarding our brokerage account, we also do some Covered Calls investing there and pay taxes on our realized capital gains each year. The bookkeeping is simplified substantially since we have our broker (Schwab) download all our brokerage account transaction details into TurboTax.
Best Wishes and Godspeed,
Jeff
partlow@cox.net
