Everything in your IRA eventually gets taxed at ordinary income tax rates, but those taxes are deferred until you take distributions (or do a Roth conversion).All of the dividends and capital gains paid from mutual funds or ETFs and many stocks are qualified dividends. This means they get special income tax rates provided dividends are qualified and capital gains are long term.Interest is taxed as ordinary income.So if you have investments that trade short term, ie, held less than one year, those are better in an IRA. So is anything paying interest. Bond fund. Bonds. Dividends that are not qualified (but watch out for UTBI from master partnerships).IRA is best managed to pay those income taxes when you have low income tax years. You can at least do partial Roth conversions to take advantage of those lower tax brackets--even if you are not old enough to take penalty free distributions, usually after age 59-1/2. If you find yourself in the 15% bracket, use it all. Some would continue all the way up to the 25% bracket, but after that it gets iffy. Depends on your circumstances.Generally long term buy and hold is better than IRA investments from a income tax point of view. However, it can be remarkably difficult to find investments you can truly hold long term. That is the major advantage of the IRA. You don't have to worry about taxes. You can make decisions based solely on investment quality.I don't think the Money magazine article makes a lot of difference to many of us, but it is something to be aware of and see what fits in your situation.
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