Volume 8 Issue 2008

 
 


Contributing to an individual retirement account (IRA) can be a useful tax-saving strategy. Obtaining the maximum benefit may require some planning.

The Case for Stocks

Funds that are actively managed and trade stocks frequently may generate significant capital gains distributions. So, holding these funds in an IRA to take advantage of tax-deferred compounding can make sense.

The Scoop on Bonds

Municipal bonds typically are exempt from federal — and sometimes state — income tax, so there’s little to no tax advantage to holding them in a tax-deferred account. But high-yield corporate and convertible bonds may be good IRA candidates.

Taxes are only one consideration when you’re choosing investments for an IRA. Your goal should be to find securities that perform well and fit in with your overall investing strategy.

You should consider the fund’s investment objectives, charges, expenses, and risks carefully before you invest. The fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.

 
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