CT_Yankee,
I am not an accountant, however you are taxed on your IRA account when you begin to withdraw income from the account, so if you contribute a hundred thousand dollars in the account and begin taking out ten thousand dollars per year that money is taxed when withdrawn as ordinary income. Don't panic about having your account invested in stocks, you can buy and sell stocks as much as you like and the gains are not a taxable event until, you begin withdrawing from your account. So you invest your hundred thousand in securities and sell those securities for two hundred thousand the gain is not taxed until you begin withdrawing the money, at which time your withdrawals, would be taxed as ordinary income, the same as your base contribution.
