Municipal Bond Forum
Heirs, and munis in your IRA
Q
If I buy munis in my IRA, are they free of all taxes, even when I die? Do my heirs get them tax free? Is there a difference in tax burden if they are in California, where I live, or another state?
A
James A. Klotz responds:
Because you receive a deduction when contributing to your IRA, any distributions taken will be subject to all applicable taxes.
The only compelling reason to use tax-free bonds in your IRA is if their nominal interest rates are higher than comparable quality taxable securities.
Please consult your tax professional regarding your specific situation.
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