Hello
I am a retired senior citizen with a rather large traditional IRA. 
The money is currently invested in the stock market and I am wondering
if I can use that money to buy a fishing lodge or an apartment complex
or some other income producing property and not have to pay tax in the
process.  Or put another way, is there any way of avoiding and/or
minimizing the amount of tax that will have to be paid whenever I
begin to withdraw money from the IRA at age 72 & 1/2.  Someone told me
I could convert it into a Roth IRA and after three years it would be
tax free.  Is this correct?

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Request for Question Clarification by sublime1-ga on 09 Nov 2006 15:12 PST

regino...

This page of IRA FAQs from Firsttrade seems to cover your interests.
First of all, you mention beginning to withdraw from your IRA at the
age of 72 & 1/2, but this sections states:

"The law requires IRA owners to start taking distributions from their
 account by age 70 1/2. Failure to withdraw the required amount will
 result in a penalty of up to 50% the required withdrawal. One
 solution is to convert the Traditional IRA into a Roth IRA (after
 paying taxes on income), which is not subject to mandatory withdrawals."
http://public.firstrade.com/public/support/faqs/faqsira/#eleven


"The Roth IRA was first introduced in 1998, quickly gaining
 popularity as the new retirement planning investment vehicle.
 The main difference between the Roth IRA and the Traditional
 IRA is that contributions to a Roth IRA are not tax deductible
 and therefore come from after-tax income. However, the income
 generated by the Roth IRA is tax-free upon qualified withdrawal.
 In other words, traditional IRAs offer tax deferral while Roth
 IRA earnings are tax-exempt."
http://public.firstrade.com/public/support/faqs/faqsira/#six


However, conversion has its price:

"You can easily convert a Traditional IRA into a Roth IRA without
 any penalties. However, deferred taxes on the Traditional IRA must
 be paid upon conversion."
http://public.firstrade.com/public/support/faqs/faqsira/#seven

More on the page:
http://public.firstrade.com/public/support/faqs/faqsira/


Let me know where this takes you...

sublime1-ga

---

Clarification of Question by regino-ga on 09 Nov 2006 15:35 PST

This is exactly what I was looking for.  I'm not happy with the answer
but that's not your fault.  I guess that saying about death and taxes
is correct.  Thanks so much.

regino...

Thanks very much for confirming my response as a suitable
(if unwelcome) answer. I'll repost it here for the sake of
future readers.

---------------------------------------------------------

This page of IRA FAQs from Firsttrade seems to cover your interests.
First of all, you mention beginning to withdraw from your IRA at the
age of 72 & 1/2, but this sections states:

"The law requires IRA owners to start taking distributions from their
 account by age 70 1/2. Failure to withdraw the required amount will
 result in a penalty of up to 50% the required withdrawal. One
 solution is to convert the Traditional IRA into a Roth IRA (after
 paying taxes on income), which is not subject to mandatory withdrawals."
http://public.firstrade.com/public/support/faqs/faqsira/#eleven


"The Roth IRA was first introduced in 1998, quickly gaining
 popularity as the new retirement planning investment vehicle.
 The main difference between the Roth IRA and the Traditional
 IRA is that contributions to a Roth IRA are not tax deductible
 and therefore come from after-tax income. However, the income
 generated by the Roth IRA is tax-free upon qualified withdrawal.
 In other words, traditional IRAs offer tax deferral while Roth
 IRA earnings are tax-exempt."
http://public.firstrade.com/public/support/faqs/faqsira/#six


However, conversion has its price:

"You can easily convert a Traditional IRA into a Roth IRA without
 any penalties. However, deferred taxes on the Traditional IRA must
 be paid upon conversion."
http://public.firstrade.com/public/support/faqs/faqsira/#seven

More on the page:
http://public.firstrade.com/public/support/faqs/faqsira/

---------------------------------------------------------

Best regards...

sublime1-ga


Searches done, via Google:

"withdraw from an ira" "tax free"
://www.google.com/search?q=%22withdraw+from+an+ira%22+%22tax+free%22

Thanks again for your fine work.

There is no way to avoid taxes on your traditional IRA.  You can
covert (assuming you meet the requirements) to a Roth IRA but that
means paying tax on the converted funds at the time of conversion. 
You seem to think that real estate assets will somehow shelter your
IRA from taxes - that is not correct. Plus you will have all the risk
that goes along with real estate  If you think real estate is a better
investment than stocks you an invest in a REIT.
Your IRA custodian should be able to provide information on the
various investments available.

regino...

Thank you very much for the 5 stars and the tip. Happy retirement!

sublime1-ga