What types of investments can I make with my IRA?
The law does not permit IRA funds to be invested in life insurance or collectibles.
If you invest your IRA in collectibles, the amount invested is considered distributed in the year invested and you may have to pay a 10% additional tax on early distributions.
Here are some examples of collectibles:
- Metals - with exceptions for certain kinds of bullion,
- Coins - (but there are exceptions for certain coins),
- Alcoholic beverages, and
- Certain other tangible personal property.
Check Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), for more information on collectibles.
IRA trustees are permitted to impose additional restrictions on investments. For example, because of administrative burdens, many IRA trustees do not permit IRA owners to invest IRA funds in real estate. IRA law does not prohibit investing in real estate but trustees are not required to offer real estate as an option.
If my IRA invests in gold or other bullion, can I store the bullion in my home?
Gold and other bullion are “collectibles” under the IRA statutes, and the law discourages the holding of collectibles in IRAs. There is an exception for certain highly refined bullion provided it is in the physical possession of a bank or an IRS-approved nonbank trustee. This rule also applies to an indirect acquisition, such as having an IRA-owned Limited Liability Company (LLC) buy the bullion. IRA investments in other unconventional assets, such as closely held companies and real estate, run the risk of disqualifying the IRA because of the prohibited transaction rules against self-dealing.
Are the basic investment rules different for SEPs and SIMPLE IRA plans?
The basic investment vehicle for each of these plans is an IRA, and the investment restrictions apply equally to all types of IRAs.
Can I deduct losses in my IRA on my income tax return?
No, do not take IRA losses or gains into account on your tax return while the IRA is still open. See Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), for more information on losses in IRAs.