Tax free earnings in a traditional IRA or 401k.
If a portion of a 401k or IRA is invested in tax free municipal bonds or bond funds, is the interest and or gains from those investments considered tax free upon distribution?
If a portion of a 401k or IRA is invested in tax free municipal bonds or bond funds, is the interest and or gains from those investments considered tax free upon distribution?
Permalink Submitted by Alan Spross on Sun, 2008-04-20 03:33
No. Plus you are generally accepting a lower yield because these instruments are typically tax free when kept out of tax deferred accounts.
You are basically converting the interest to taxable interest by buying these in tax deferred accounts, so this is is not a good plan unless you are doing it for the insurance on a particular issue or other atypical reason.