Pop quiz: What do these six investments have in common?


Market Cap

Earnings Per Share (Past 12 Months)

1-Year Total Return

Berkshire Hathaway (NYSE:BRK-A)

$184 billion



XM Satellite Radio (NASDAQ:XMSR)

$2.47 billion




$148 billion



Marvel Entertainment (NYSE:MVL)

$2.43 billion



Suntech Power (NYSE:STP)

$5.08 billion




$77 billion*



Source: Yahoo Finance. *Assets under management.

At first glance, these stocks have just about nothing in common. They include big and small stocks, profitable and unprofitable businesses, and hot and cold stock performance. There's even an index ETF thrown in for good measure.

Yet the one thing they all share is this: They don't belong in your traditional IRA.

Don't get me wrong -- IRAs are an essential tool for a successful retirement plan. They give you a valuable incentive to save for retirement: a current tax deduction that can be worth thousands of dollars to you up front.

What's more, they're incredibly flexible. You can own just about anything you want in them, and as long as you keep your money in your IRA, you don't have to worry about paying taxes, either on the income your investments pay or on the profits you earn when you sell.

But even though IRAs have a huge role to play in helping your reach your retirement goals, they aren't the only game in town. And for certain types of investments, you can do a lot better if you keep them out of your retirement accounts.

The other retirement nest egg
This month's issue of The Motley Fool's Rule Your Retirement newsletter -- available online this afternoon at 4 p.m. ET -- talks about how best to invest the money you've got outside your retirement accounts. As Foolish retirement expert Robert Brokamp points out, while you'll likely end up with lots of your retirement savings in IRAs and 401(k) plans, there are some good reasons why keeping long-term money in regular, old-fashioned taxable accounts makes sense.

The most obvious is that you don't want to leave yourself strapped if a financial emergency comes up before you retire. Taking money early from your IRA usually comes at a high price: You have to pay taxes on what you pull from your account, along with an extra 10% penalty for good measure. Although you may be able to avoid the penalty in some cases, it's easier just to have some money available if you need it.

Playing the tax game
But the other reason to do some investing in taxable accounts is that you can cut your taxes. It may sound counterintuitive that a taxable account could be a better way to invest than a tax-favored retirement account. But for some investments, taxable accounts have a decided advantage.

The key is in the many different tax rates that currently exist. Right now, dividends and capital gains on most stocks have a maximum tax rate of 15%. In contrast, on money you take out of your IRA, higher tax rates apply -- rates that go as high as 35%. And that's just right now -- with a presidential election around the corner, you can't be sure what the rates will be next year, let alone by the time you retire.

That means that while high-income investments that don't qualify for these lower rates, such as REIT Simon Property Group (NYSE:SPG), benefit greatly from being inside an IRA, stocks that pay no or low dividends -- like the ones in the table above -- often do better in a taxable account. Getting those stocks out of your IRA can cut your tax bill by more than half.

If you want to know more about what should and shouldn't go into your retirement accounts -- along with some specific investment ideas to help you retire successfully -- be sure to look through this month's issue of Rule Your Retirement. It's yours absolutely free with a 30-day trial, which will give you access to all sorts of helpful resources to help you with your retirement planning.