Here's a recent question from a Fool reader: "If my IRA is invested in mutual funds and I want to shift that into an index fund or stocks, can I do that?" The answer is yes, probably. It all depends on the type of financial institution that is serving as your custodian. In other words, is your IRA with a broker or a mutual fund family?

If your IRA is maintained by a brokerage, you should be able to shift around your investments from one mutual fund to another, or to and from individual stocks such as Home Depot (NYSE:HD), Coca-Cola (NYSE:KO), or Intel (NASDAQ:INTC). You won't have to pay taxes on any gains when you move the money, but you probably will have to pay your brokerage the applicable commissions for the transactions. Plus, if your mutual fund investment is in the form of B or C shares, you might have to pay a "back-end load."

If your IRA is with a mutual fund family, you can probably switch money from one fund to another within the same family without any costs, even if you have B or C shares. However, some families limit the number of times you can switch, such as once a year.

Chances are you would not be able to sell the fund and immediately buy shares of an individual stock. You would probably first have to open a brokerage account and transfer the proceeds of the fund sale to that account. Many mutual fund families also offer discount broker services, so they could handle the transfer for you. However, it might be worthwhile to check out other discount brokers to see who's offering the best deal.

Setting up an IRA, if you don't have one, is not as complicated as you might think. Learn much more about IRAs (both the traditional and Roth kinds) in our IRA Center. You have just a few days left to open an IRA for 2003 (the deadline is April 15).

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.