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No. of Recommendations: 6
better nin cash account or IRA account?

I will repeat my answer from the same question you asked on the Retirement Investing board:

I assume you are asking about this from a tax perspective on the income, and that the IRA that you are talking about is a Traditional, not a Roth account. If that's the case, then it depends on the type of dividends that the stock produces. If the preferred stock produces qualified dividends, which are taxed at capital gains rates (assuming you hold the stock for a period of at least 90 days during the 181 day period beginning 90 days before the ex-dividend date), then it's best to use a taxable (cash) account.

If you're not going to meet the holding period (say you buy just for the dividend, and then plan to sell), or if the preferred stocks are ones that produce non-qualified dividends, then they will be taxed at ordinary income rates. Since you will already be taxed at ordinary income rates, then you won't be paying more in taxes on the dividends by holding the preferred stocks in a Traditional IRA.

If you are comparing from a tax perspective between a taxable (cash) account and a Roth IRA, then holding in the Roth would always win, because of the ability to take tax-free withdrawals from the Roth IRA.

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