Short-Term Gains and IRAs

 

Short-Term Gains and IRAs

Investors who earned short-term gains from an investment that was in an individual retirement account (IRA) do not have to pay any short-term capital gains taxes on that income. However, if an investor takes out any money from the IRA, the withdrawal amount is considered income and is taxed at the investor's or taxpayer's ordinary income tax rate.

The benefit to IRAs is that investors can grow their investments over the years without paying any capital gains taxes. In other words, the taxes on the gains are deferred, but once the money is withdrawn, it's taxed at the current income tax rate for that investor.