The IRS prohibits any type of derivative trading that involves unlimited or indefinite risk, such as issuing short calls or ratio differentials. Collectibles such as works of art, carpets, antiques, metals, gems, stamps, coins and alcoholic beverages cannot be held in these accounts. Gold IRA accounts are an exception to this rule and are allowed to be held in self-managed IRAs. The IRS doesn't have a list of “approved investments” for self-managed IRAs, but what it does have is a list of types of investments, transactions, and prohibited situations where you don't want your IRA to participate.
These frequently asked questions and answers provide general information and should not be cited as a legal authority. However, it's important to know and understand that there are limitations. Self-directed IRAs are governed by a set of rules that self-directed investors must know and follow. This means that there are some transactions that aren't allowed with your self-directed IRA. Some types of self-directed transactions violate the basic intent of your IRA and may subject your account to risks and penalties.
In addition, your retirement plan is meant to benefit you when you retire and not before. Transactions that could be interpreted as an immediate financial gain for the account holder or other disqualified individuals are not allowed. Like other retirement plans, IRAs offer tax advantages, specifically, the possibility of tax-deferred or tax-exempt growth. Paying deferred taxes means that you postpone taxes until you later withdraw money.
Tax-free means that you don't owe any tax on the profits on your investment, as long as you follow the rules for withdrawing money from the account. But in exchange for these tax benefits, there are certain restrictions. While it is not prohibited on the IRA side, there is another class of investments in which an IRA cannot participate. There are tons of options, but to ensure that you comply with all the rules and regulations, it's best to work with a self-directed IRA depositary, such as IRA Innovations, to find the right investments you can make.
