I’m frequently pitched investment opportunities, ranging from real estate to oil leases to restaurants. I’ve always invested out of my bank account but have been curious if I could invest through my tax-deferred requirement accounts.
The short answer is yes. These investments are possible, but probably not through the broker that holds your IRA.
I reached out to Kirk Chisholm, Principal of wealth management firm Innovative Advisory Group to learn more. I posed this scenario: I want to invest in a real estate deal for a new apartment complex in town. I want to invest through my IRA funds that are currently in an account with a major broker.
UpMoney: Will I have to move my funds to a new custodian?
Chisholm: The short answer is, probably. Although all qualified custodians are allowed to hold virtually any asset in their custody for IRAs, most of them do not. It is the custodian’s choice on what assets they allow their clients to hold at their firm. Most custodians have chosen to specialize in certain asset types, either traditional or alternative investments.
For example, if you ask the broker dealer that you buy and sell stocks through, to hold an apartment complex, they will probably look at you funny. Then they’ll say you can’t do that. What they really mean is that they won’t do that.
You will need to find a qualified custodian that specializes in alternative investments if you want to fully explore alternative investments with your self-directed IRA. There are a number of points you will need to consider to find the right fit for you. [Read more…] about Using an IRA to Invest in Alternative Assets