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URL:  http://boards.fool.com/i-have-been-investing-in-mutual-funds-for-my-roth-29936652.aspx

Subject:  Re: Roth IRA Date:  3/26/2012  4:28 PM
Author:  BruceCM Number:  70446 of 78166

I have been investing in mutual funds for my Roth IRA. Instead of mutual funds, can I invest in dividend paying stocks such as JNJ and PG....and in REITs like NLY? Would there be any problems, such as in taxes, in investing in dividend stocks..

All gains from dividends, interest or capital gains, that hapens inside of a tax deferred account such as an IRA, retirement plan or deferred annuity, are deferred until you make withdrawals, at which time these untaxed dollars will be taxed as ordinary income..

is this a good idea rather than mutual funds

Individual stock investing is something the average individual should not do. Yes, there's lots of press right now on dividend paying stocks...but remember there was lots of press in the 90s on technology companies and lots of press in the early 2000s on real estate. Where would you be today if you'd invested primarily in individual companies back when these stocks were 'hot'?

MLPs are another story.
Yes you can hold these in a tax deferred account, but any earnings for the year that exceeds $1,000 must be reported by the Roth IRA custodian and will be taxed at trust rates. This is because the IRS treats tax deferred accounts as they treat non-profit organizations, who, if they profit from operating a