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>> I'm about to put some of my IRA funds into stocks and wondering about dividends the stocks yield. Can they be deposited into my IRA money market account (or put into a DRIP) without a penalty? That is, do they count as a new contribution, or are they merely returns on invested funds?
Dividends from stocks in an IRA are part of the return on the IRA investment and must be kept within the IRA. They do not count as contributions. If you remove them, they count as withdrawals and would be subject to a penalty unless you meet the requirements for withdrawing from the IRA.
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