Individual stocks in Traditional IRA...

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Posts: 13
Joined: Sat Oct 20, 2018 4:40 pm

Individual stocks in Traditional IRA...

Post by vss » Wed Nov 07, 2018 11:23 pm


I wanted to know what is the real benefit of allocating mutual funds/ETFs in my Traditional IRA account rather than buying individual stocks? I know for sure that there are higher risks buying individual stocks. Other than the risks, if one is smart enough, don't you guys think that buying stocks would mean greater profits?

On the tax front, am I right to say, that the tax will be the same at 59 1/2 years when I do my RMD withdrawal? Holding in mutual funds / ETF or stocks should be treated the same when paying taxes? Please confirm.

The other question is if I don't wait for a year and sell my individual stocks within the year, are there any issues now and will I be paying more taxes at 59 1/2 years during withdrawal since i didn't wait for more than year for long term loss/gains?

Please advise.

Posts: 499
Joined: Tue Apr 03, 2012 2:25 pm

Re: Individual stocks in Traditional IRA...

Post by Elbowman » Wed Nov 07, 2018 11:36 pm

I believe all taxes will be the same whether it is individual stocks or mutual funds.
vss wrote:
Wed Nov 07, 2018 11:23 pm
if one is smart enough
If you're smart enough you can do just about anything. In this case, people who beat the market by enough to discount luck are so rare they become famous. You need to have an honest conversation with yourself about why you think you are that smart, and if you are willing to gamble your retirement on being right.

Posts: 219
Joined: Sun Dec 26, 2010 7:29 pm
Location: Twinsburg Ohio

Re: Individual stocks in Traditional IRA...

Post by Ace1 » Thu Nov 08, 2018 12:38 am

All investments held inside a tira, whether it be individual stocks, bonds, stock or bond mutual funds, etf’s,
cd’s etc, and the income they generate, whether it is interest or dividends or gains (or losses) of any kind,
are ALL taxed as ordinary income when you take a distribution from the tira. There are no short or long term gains
for income tax purposes inside the tira. And to clarify, RMD’s begin when you are 70 1/2, not 59 1/2.
You are taking a distribution when you withdraw (or do a conversion) from the tira at any age.
Before 59 1/2, there generally is a penalty along with ordinary income tax, after 59 1/2, it is usually subject to
ordinary income tax.
As to your ability to successfully pick individual stocks, I cannot comment other than to say good luck to you
in that arena.

Post Reply