Tax deferal

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Alex
Alex Member Posts: 1 Newcomer

I contribute a combined $2500 per year to Roth and IRA accounts. This year I will earn $12,000 in interest from my CD's. My question is where/what can I invest this interest money to defer taxes until I retire in 5 years.

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  • BillA
    BillA Member Posts: 3 Newcomer
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    My understanding is that income and future investments are tax-deferred so long as they stay within a tax-deferred account. In the simple case, you just invest it in whatever investment options are available within the account that generated it. For example, if your IRA is in a Fidelity IRA account, you can invest in various stocks, bonds, and fixed-income investments offered within that account by Fidelity. You did that when you put the money in the CD. Taxes on the principle, interest, and growth will continue to be deferred until you take a distribution from the Roth/IRA (and there are many rules to be aware of there)..