Making Cents: Don’t Put Just Anything in an IRA

Some investments may be unsuitable for IRAs--especially tax-exempt municipal bonds. The interest on these bonds is already tax-free from both state and federal taxes, and worse, when the earnings are withdrawn they’ll be taxed as regular income. U.S. Treasury bonds are exempt from state income tax, but the more dramatic federal tax savings and their overall safety and convenience make them reasonable in an individual retirement account.