I realize that an IRA , and it's interest/dividends, are not taxable until the money is withdrawn, and then it is taxes as ordinary income.
Consequently, there is no advantage in investing in tax exempt securities , such as municipal bonds, in an IRA account..
HOWEVER..... If an IRA account were to have investments in tax exempt securities, and the interest from those securities are designated to be paid into a non-IRA account, where they may be withdrawn at will, are these proceeds (and not the principle) still tax exempt ?
Is this a reasonable way to obtain tax exempt income from an existing IRA without getting on the wrong side of the IRS ?
Thanks for your informed advice..
Andy