What Assets Can Be Held Inside an IRA?

You have a wide choice of investments for your IRA nest egg.

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The U.S. Tax Code gives general guidance on what investments are permitted for your IRA assets. It allows a range of investment options for your traditional or Roth IRA. The code specifies a few investments as being off-limits for individual retirement accounts.

Conventional Investments

The tax code generally allows you to buy into the IRA investment options offered by banks, brokerages and mutual fund companies. This means you can invest in stocks, U.S. government securities, other top-rated government and corporate bonds, mutual fund shares, exchange traded funds, real estate investment trusts, money market accounts, certificates of deposit, and other types of savings accounts.

Higher-Risk Investments

The rules governing IRA investments also permit a number of higher-risk alternatives to conventional investments. These include initial public stock offerings, stock options, precious-metal mining stocks, residential or commercial real estate, mortgages, foreign real estate, foreclosure properties, limited liability companies and partnerships, oil and gas ventures, privately held businesses, tax liens, and raw land. These higher-risk investments offer potentially large rewards. The difficulty is finding a knowledgeable IRA custodian willing to handle these exotic investments on your behalf. Most banks, brokerages and mutual funds don't want to be involved with such investments. If you find a custodian, the administration fees are likely to be high.

Precious Metals

You can put IRA funds into precious metals, but you must open a separate IRA that only invests in these. You can include the modern gold, platinum, palladium and silver legal-tender bullion coins issued by the U.S. and several foreign governments such as Canada, Austria and Australia. These coins trade in the market at their bullion value. You can also invest in gold, platinum, palladium and silver bars issued by banks, mining companies and other private parties. Coins must be of 0.995 fineness or better. Bars must be of 0.9995 fineness or better. Your bullion purchases will be held for you by your precious-metals IRA custodian until you start selling at retirement.

Banned Investments

The tax code prohibits IRA investments in collectibles or cash-value life insurance. The Internal Revenue Service defines collectibles as artwork, rugs, antiques, gems, stamps, collector coins, wine and other alcoholic beverages. Collectibles don't trade on organized markets, and their value depends on subjective factors such as grade, condition and maker.