Interest/Dividends from IRA

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date Interest/Dividends from IRA AndyS 06-22-2009  Re: Interest/Dividends from IRA Alan 06-22-2009
Posted by AndyS on June 22, 2009, 5:11 pm Please log in for more thread options I realize that an IRA , and it's interest/dividends, are not taxable until the money is withdrawn, and then it is taxes as ordinary income. Consequently, there is no advantage in investing in tax exempt securities , such as municipal bonds, in an IRA account.. HOWEVER..... If an IRA account were to have investments in tax exempt securities, and the interest from those securities are designated to be paid into a non-IRA account, where they may be withdrawn at will, are these proceeds (and not the principle) still tax exempt ? Is this a reasonable way to obtain tax exempt income from an existing IRA without getting on the wrong side of the IRS ? Thanks for your informed advice.. Andy -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on June 22, 2009, 5:56 pm Please log in for more thread options AndyS wrote: > I realize that an IRA , and it's interest/dividends, are not taxable > until the money is withdrawn, and then it is taxes as ordinary > income. > > Consequently, there is no advantage in investing in tax exempt > securities , such as municipal bonds, in an IRA account.. > > > HOWEVER..... If an IRA account were to have investments in > tax exempt securities, and the interest from those securities are > designated to be paid into a non-IRA account, where they may > be withdrawn at will, are these proceeds (and not the principle) > still tax exempt ? > > Is this a reasonable way to obtain tax exempt income from an > existing IRA without getting on the wrong side of the IRS ? > > Thanks for your informed advice.. > > Andy > I think you may be asking whether you can purchase a municipal bond in an IRA and somehow instruct the trustee not to deposit the interest payments inside your IRA but rather to deposit them to a taxable asset account you maintain and thereby sidestep having an IRA distribution and not pay tax on the interest. No! -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >>