Mutual Funds/trading mutual funds


I have an IRA account and a non-IRA account, with several mutual funds in each. If I want to trade all or part of a fund in my IRA account for a fund in my non-IRA account, is that allowed and would it be a 'taxable event' at that time?  Even if it's not a taxable event, is it a bad idea? I heard that IRA money should be the last thing to withdraw, since it's earning interest tax-free as long as it's in there.  My other option is to trade the same mutual fund (it's also in my non-IRA account) for another non-IRA fund, but that would for sure be a taxable event. So I'm torn between either taking money out of the IRA fund, where it's earning tax-free interest, or creating a taxable event.  Thanks

Hi Lee,

Exchanges within an IRA are not taxable events. If you are taking money out of a traditional IRA, there would be tax and possibly a penalty. Exchanges within a taxable account are taxable events. Trades within IRAs are different from withdrawing money from IRAs and have different consequences. These questions are a little confusing.  Why don't you do the exchange in the IRA?

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Michael Weiss, CFA


I can answer most questions about mutual funds.


I am the owner of Series 7 Exam Tutor , a financial tutoring business that provides personalized tutoring for the Series 7 Exam, the Series 6 Exam ,the Series 65 Exam, the Series 66 Exam, the Series 63 Exam and the Series 24 Exam . I also offer tutoring for finance courses. For additional information, please visit, Finance Exam Tutor. Prior to launching Series 7 Exam Tutor, I worked in investments for 20 years with the majority of this time focused on investment analysis and portfolio management. I have worked for large companies such as Merrill Lynch and Evergreen Investments and have also worked for smaller firms as well. Throughout my career, I have sought to mentor younger colleagues whenever possible, especially those enrolled in the CFA program. I completed the CFA program in 2002 after passing all three exams on the first try. I also passed the Series 7 Exam with a score of 94%. For additional information about me, you can visit the links below:

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M.B.A. in Finance & Investments from the Zicklin School of Business at Baruch College and a B.A. in Finance & Economics from the City University of New York - Baccalaureate Program.

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