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What are the most suitable assets types to own within a Roth IRA vs. a taxable account?

Generally, Roth IRAs are best suited for assets that a) generate a high return over a long holding period and b) are taxed at a comparably high rate. I'm looking for a list of specific assets, and this is what I've come up so far:

Most Suitable:

  • Domestic REITs
  • Domestic stocks with high dividend yield (if the tax-favored status of qualified dividends disappears)

Not Suitable:

  • Treasuries/municipal bonds
  • Foreign REITs
  • Foreign dividend-paying stocks

Any other asset types I should add?

1

You're on the right track to answering your own question.

I guess you might add collectibles to the Roth if you can because gains on those are typically taxed at a higher rate.

Just remember that the rules on Roths can change at any time. The rules now might be quite different from the rules when you want to withdraw.

  • 3
    According to irs.gov/publications/p590/…, buying collectibles may be considered a Prohibited Transaction, which results in the Roth IRA being liquidated and a 10% penalty assessed; there are limited exceptions for certain types of coins and bullion – Tony the Pony Jul 5 '11 at 10:47

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