You said;
Not for regular IRAs, and I don't think for inherited IRA's either -- you can satisfy the IRA RMD by transferring the securities from the IRA to a regular taxable account -- known as an in-kind distribution.
If you have a traditional IRA and turn 70 1/2 years old, you have to begin taking RMD's, right? Lets say you have a hundred grand in the account and all but $50 is in securities. Fifty in cash. If the first RMD is...say $125, you only need to liquidate a further $75 in order to satisfy that requirement. You don't have to liquidate all the positions at the beginning of the RMD process (go all to cash), nor do you have to move the money from the IRA to a non-tax qualified account and THEN take the money out. At least that is what I learned when I was a broker or if I am misunderstanding the IRS publications. (Here's the edit) You are correct however in that there is nothing stopping you from taking an RMD and placing the proceeds into a normal, vanilla, taxable investment account. In there you can invest any way you wish and be taxed on the gains only.
I had a client who passed away and had 4 kids. They all set up the inherited IRA accounts I mentioned above to receive their share. One kept the securities, transferred to the new, inherited IRA "in kind" as you said - a common practice and began the RMD process, selling off as needed to satisfy the dollar amount required. One liquidated the securities and just had the cash and took the RMD.s, one decided on the 5 year option and one bit the bullet on taxes and took it all at once to pay bills.
Also, as far as I know, there is no restriction on making trades in such an account, it's just that, as I said above, you can not add more money or contribute to this type of account. So if you don't like that Mom had shares of Apple for instance, and want to buy something else, to my knowledge, there is nothing that says you can't make a trade.
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