Roth IRAs are tax-free, but you must follow the rules

— -- Q: What are the tax implications of transferring the assets held in an taxable investment account with a broker to a Roth IRA?

A: With the stock market's returns being, well, shall we say, subpar, some investors are paying closer attention to taxes.

And paying attention to taxes, especially now that the stock market isn't an ATM, is smart. Given the size of capital gains taxes, especially if you sell a stock you've owned less than a year, Uncle Sam can end up taking a big chunk of your returns.

The Roth IRA is a great idea for people preparing for retirement. The Roth is structured so that you contribute money that's already been taxed. You can invest up to $5000 a year in a Roth, or $6,000 if you're 50 years old or older, if you meet a number of criteria. You can get the full details on annual contribution limits here.

Here's the catch for you, though. You need to contribute cash, not stock. That means if you have a stock in a taxable account that you want to move to a Roth IRA, you'll need to sell the stock in your taxable account, and you may owe capital gains taxes on the sale.

You can then move the proceeds to the Roth IRA account and buy the stock there, or invest in anything else you want.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz