Three Things You Can’t Invest in With an IRA

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Non recourse borrowing

Preparing for retirement should be one of every working American’s concerns, and for many, it is. Many Americans believe that they will have to work until the age of 80 to be able to retire comfortably, and as it is, almost half of senior citizens in the U.S. are considered to be economically vulnerable. A popular method of preparing for retirement is to open an individual retirement account (IRA), and invest with it.

1. Collectibles
One thing a person can not invest in with his or her IRA is anything that can be considered a collectible. This includes things like stamps, toys, sports cards, antiques, alcohol and wine, and jewelry. One of the reasons people might try to invest in these things is for the tax shelter, but it’s not possible. The taxes must be paid on any financial gain that comes from collectibles.

2. Real Estate
Another thing that people might want to invest in with their IRA is real estate, but the rules are tricky here. Typically, a person can’t invest in real estate with an IRA, at least not in the sense that a person can use the property or receive income from it. This is where self directed IRA lending comes in. Using self directed IRA to buy real estate has to be done in a certain way and with a non recourse mortgage loan. An IRA non recourse loan agreement allows the IRA owner to borrow the funds without putting up more than some real property, and the non recourse loan lender cannot seize anything other than that collateral if the borrower defaults. Self directed IRA lending, then, finances the sale of the property to the IRA.

3. Coins
Coins are another thing that people might feel compelled to invest in with their IRA, but again, this is not allowed. Many people have coin collections, which is fine, but just because (and especially if) a coin can be seen as a collectible doesn’t mean it can be held by the IRA. The coin must be really high in mineral content for that to happen.

Have you had any bad luck trying to invest in any of these with your IRA? Let us know in the comments.
For more information, read this website.


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