The more you research this subject, the more you will find that the tax code allows an open field of flexibility with IRAs and in fact, it’s not the IRS that frowns on self-directed IRAs – it’s the investment firms that want to stay in control of your assets. After all, with a TSD IRA, it’s YOU who is making the greater returns, not them.

Self-directed IRAs, the kind that let you pick investments like candy, are quite the rage these days, growing at an annual rate of 25%, compared to 8% for the overall IRA market.”

Forbes – 2006

The most common question has always been, “can I invest in real estate with my IRA. The answer, of course, is yes.

“Real estate has always been permitted in IRAs, but few people seemed to know about this option – until the stock market began to decline. Financial institutions, meanwhile, had little incentive to recommend something other than stocks, bonds or mutual funds.”

New York Times – 2005

Prohibited Investments

ERISA lists the investment {limitations|restrictions| of an IRA in IRC Section 408. An IRA cannot invest in life insurance contracts or collectibles, as listed below:

  • Any work of art
  • Any alcoholic beverage
  • Any rug or antique
  • Any gem and certain metals
  • Any stamp and certain coins

Note: “Collectible metals” generally refers to jewelry, not precious metal commodities, and “collectible coins” are generally special issues, such as those you may find on infomercials, not investment-grade precious-metal bullion coins. These exceptions are covered in Title 26 Section 408(m)(3)(A) and Title 31 Section 5112(k).