Real estate, including vacant land, commercial buildings, apartment buildings, condominiums, and the like
Closely-held business interests, including private stocks, limited partnerships, and limited liability companies
Notes, mortgages, and other debt instruments
Managed commodity trading accounts
Because contributions to an IRA must be in the form of cash, a taxpayer cannot contribute an asset directly to the IRA – the taxpayer must contribute cash to the IRA and then direct the trustee to purchase the desired asset. There are other restrictions as well. For example, an IRA cannot purchase real estate from the taxpayer, nor can the taxpayer use the real estate personally at any time or lease the property to a related person. Thus, as an example, the IRA could not lease space in an office building owned by the IRA to a business owned by the taxpayer or purchase a condominium to be used by the taxpayer’s child while the child is attending college. Nor can the IRA purchase shares of a closely-held corporation if the taxpayer or a related party is the owner of more than 50% of the equity or voting power of the entity whose interests are to be purchased by the IRA.
The reason most IRAs are not invested in these types of assets is that few trust companies are willing to hold and monitor these types of assets. There are, however, a limited number of trust companies that accept IRAs that intend to invest in such specialized assets. If you desire to discuss the investment of your IRA in specialized assets, please do not hesitate to contact us.