Investing/trading in IRA account

[curiousgeorge]

Good afternoon.
Used to do a little investing/trading  in IRA account.  Started taking MRDs in 2012.  Is it better to do continue investing/trading in the IRA account or a taxable account?
Thank you!   

[mwcpa]

how one "invests" or "trades" the assets within an IRA account is not a tax matter (unless you have a self directed one, which are really tricky from a compliance standpoint).

Traditional investment philosophy would be that the older you are the more conservative you invest as "current income" and capital preservation are more needed than long term growth....

Lots of things impact how and why one invests and trades.... goals, risk tolerance, time horizon, etc.

[curiousgeorge]

Thankyou very much MW. 
Account is held by a brokerage custodian, but can trade on the account. Thought was along the line income tax on an IRA distribution (MRDs already in effect) vs. capitalgains tax on investments in a taxable account.

[mwcpa]

any investment income earned in the IRA (whether it be long term capital gain or interest) will be eventually taxed as "ordinary" income to you (39.6% maximum tax rate)... none of the special tax rates for investors is afforded to distributions from an IRA.... you can though earn what ever you want in the account from the assets it holds (there are some asset classes that can cause tax issues in an IRA.. like MLPs which create UBTI).

[curiousgeorge]

I guess better to trade in a taxable account then - capital gains tax lower than ordinary income tax, and losses can lower taxable amount.

I read somewhere that tax on UBTI does not apply to distributions below $1000.  Is this correct.

Thanks again MW .... and have a great day!

[mwcpa]

UBT applies to the "income" earned by the IRA related to its UBTI interests, not the amount of cash payouts from it to the IRA or payouts to you.  And, yes, the if the net income is under 1,000 there is no federal tax... some states have different rules and a separate tax filings (form 990T) may be required for the IRA.

If you are of retirement age and you have properly allocated all of your assets (I assume you have employed a good philosophy here) then keeping more of the capital appreciation and dividend producing assets in taxable accounts and more interest producing instruments in an IRA may make tax sense.  Asset allocation is an important part of financial and tax planning and should be reviewed with those qualified to do such.

[m2m]

Very useful information for retirees holding IRA accounts. Thanks.