Roth IRA what kind of investments are possible?
What kind of investments are possible with a Roth IRA? Can you do real estate, homes, farmland,gold, rental properties? Can you trade stocks? Can the Roth IRA be split up with part stocks and part real estate?
Permalink Submitted by Alan Spross on Fri, 2011-12-02 18:30
Improved and unimproved real estate, precious metals, etc are referred to as “alternative investments” because they require special handling and only a handful of IRA custodians (eg Pensco, Entrust) handle such assets in IRA accounts. Typically, a separate IRA account is used to hold such investments with your typical stocks, bonds and mutual funds held in a separate IRA account. That way if there is a prohibited transaction involving the alternative investments that causes the IRA to be distributed, it will not affect the other IRA account.
There is no difference in this respect between traditional and Roth IRAs. A Roth IRA might be better because there are no RMDs which might result in liquidity problems, and a forced distribution would likely be mainly a return of contributions that have already been taxed.