What Investments Cannot Be Held in an IRA?

Individual retirement accounts (IRAs) provide investors with an advantageous tax-advantaged investment option. Investors can utilize an IRA to invest in stocks, bonds, treasuries or mutual funds that hold multiple assets together.

But certain investments cannot be placed within an IRA or qualified plan, due to their own unique risks and require special care and management.

Life Insurance

Self-directed IRAs cannot invest in life insurance policies as this would violate federal rules and are forbidden from investing in collectives such as S-corps and partnerships.

IRAs may invest in real estate, though the IRS places limitations on which properties can be purchased and sold; for instance, homes or commercial buildings cannot be acquired through an IRA. Given these regulations are complex, it’s advisable to consult an advisor in order to comply with them properly.

Collector items that are prohibited in an IRA include art, antiques, stamps, rugs, alcohol and metals. Any transactions involving these assets through an IRA would be considered prohibited transactions and can lead to distribution to the owner and tax liability. It would generally be best to avoid prohibited investments altogether and instead invest them through a non-qualified taxable account; this will save on both taxes and penalties.


Your IRA does not permit certain investments that might seem odd at first, such as art works, rugs or antiques, metals and gems, stamps and coins or alcohol beverages; there may be exceptions depending on legislation; collectibles can sometimes be held within an IRA and other retirement plans due to class exemptions granted for them by lawmakers.

Additionally, the IRS maintains a list of individuals considered disqualified persons and your IRA cannot conduct transactions directly or indirectly with them – such as yourself, spouse and children as well as parents, grandparents and great-grandparents.

Due to the Tax Court case Rollins v. Commissioner, IRAs are prohibited from investing in real estate where IRA funds are used directly for land purchase, or entities with oil and gas lease interests that generate unrelated business taxable income. In that case, it was found that taxpayers engaged in prohibited transactions by using their IRA funds for personal gain by engaging in prohibited transactions with their IRA funds.

Real Estate

Real estate investments are prohibited for IRA accounts in order to prevent their owners from using their retirement savings for purchasing personal properties such as vacation properties, residences and rental income.

Investments in property owned by an IRA are generally prohibited transactions, with severe penalties. An IRA cannot purchase real estate; nor may its owner live in it or rent it out directly, receiving any payment related to managing it; family members and certain “disqualified individuals” cannot benefit directly either.

However, with a self-directed IRA custodian who permits real estate investments, there are ways of investing without breaking any rules. A knowledgeable investment advisor is essential in this process and ensures your retirement plan reaches its goals successfully.

Precious Metals

Precious metals have historically outshone stocks and other paper assets during periods of economic volatility, providing a safe haven for your retirement savings from economic strain. An investment in gold, silver or platinum through an IRA provides this protection; gold, silver and platinum meet IRS fineness standards so are most commonly chosen by investors as precious metal IRA options; however not all dealers provide equal service; some may have poor BBB ratings or even have been investigated by authorities for misleading customers.

It’s essential when selecting a precious metals dealer for your self-directed IRA that you select one with an excellent track record and reliable custodians, such as Equity Trust or Kingdom Trust. Augusta Precious Metals works with these custodians, offering safe storage solutions like Equity Trust or Kingdom Trust; furthermore they also provide free guides as well as one-on-one meetings with Harvard-trained economist Delvyn Steele so you can make well informed investments decisions.

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