Roth IRA

It depends on how much was contributed and possibly other considerations. See Publication 590.

Selling the stock: none. Closing the account: Varies.

If this is your only Roth IRA account and if the amount you get when you close the IRA is less than you contributed, and if you had never taken a distribution from a Roth IRA before, then at best you will have a loss that can be claimed as a miscellaneous itemized deduction subject to the 2% rules on Schedule A.

And of course you loose the potential of a tax free gain when (and if) the stock recovers.

Far be it for me to suggest that a post is TOO succinct , but there are financial consequences to selling stocks when they are down.

IMO, one of the primary objectives during an economic contraction is to position oneself for the coming expansion. Depending on the stocks you have, selling them at these prices does not position you for the next stage of the economic cycle. An exception would be that if you are not diversified now, and you use the proceeds to become more diversified (like with an index fund).

Good luck with your health.

-HW "Skip" Weldon Columbia, SC

I figured that the OP already knew that a sale for less than cost is a loss. However, since it's inside an IRA (type doesn't matter), there's no recognized consequence. Now, closing the account instead of re-investing the proceeds (and upon a subsequent sale, having a gain greater than the loss first sustained) does count.

No argument there, except that sometimes, diversification can be a bad thing. Many rules have exceptions. ;-)

========================================= MODERATOR'S COMMENT: And all generalizations are false.

I believe he was only answering about the TAX consequences, because of where the question was posted.

You're correct that there may be investment consequences. Even during a financial meltdown, the old adage "buy low, sell high" still holds. If you sell now, you may be doing the opposite, unless you feel that the stock is not likely to recover, and may drop further.