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My question is: When you sell the stock, is that not considered a "withdrawal"? I assume that it is not, or this strategy would not be recommended. For it to be an acceptable practice, is it necessary to sell and immediately replace the sold stock with another?

You are correct in assuming that when you sell a stock that is in an IRA it is not considered a withdrawal. You could buy another stock with the money resulting from the sale or you could keep it as cash (I wouldn't recommend keeping it as cash, though). It is only considered a "withdrawal" if you take possession of the money (there are certain exceptions to this too). You can have many different types of investments in an IRA and you can switch between investments without penalty as long as you keep it in an IRA. An IRA is just a "basket" that holds investments. You can put many different types of investments (cash, stocks, bonds, mutual funds, CD's, etc) in that basket. I hope this was helpful.

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