Home Money & Finance Things to Know About Gold and Other Unconventional Assets IRA

Things to Know About Gold and Other Unconventional Assets IRA

by Olufisayo
Gold and Other Unconventional Assets IRA

The total amount recorded to be held in individual retirement accounts is said to be about 8 trillion dollars. Unconventional assets are said to hold about 50 billion dollars of this total amount.

When compared with the total 8 trillion dollars, the 50 billion may be considered relatively small. However, the Government Accountability Office saw this as enough reason to raise some alarm about the dangers of unconventional assets in IRAs.

According to the report they published in 2017 January, GAO believes that investing in these unconventional assets may be risky. You can click this to learn more about this report.

They believe that these accounts increase investors’ responsibilities way more than they might understand. This might subsequently trigger penalties and taxes. Furthermore, an account may be closed prematurely. Or fraud may be undetected when valueless assets are purchased because the worth of the asset wasn’t properly or accurately determined.

This, however, doesn’t mean that you can’t invest in these unconventional assets. With proper guidance, you can very well diversify your IRA with them. We are here to help you understand some important things to ensure you do not end up with regrets in the long run.

First the Basics

Before we go into discussing these assets, you first have to understand some important fundamentals.

The first thing to know is that the law does not allow investing IRA funds in collectibles and life insurance such as the following:

  • Antiques
  • Rugs
  • Arts
  • Gems
  • Metals (expect certain approved bullion)
  • Stamps
  • S corporations
  • Alcoholic beverages
  • Coins (expect certain coins)
  • Investments that are considered prohibited by IRS laws

However, the law allows investing IRA funds in several unconventional and conventional assets. Some known conventional assets include stocks, bonds, mutual funds, ETFs, and so on.

While common unconventional assets that IRA funds can be invested in are private equity, hedge funds, precious metals, and real estate. Other less common ones include limited liability companies, church bonds, promissory notes, private placements, and limited partnerships.

Is Investing in Unconventional Asset a Wise Choice?

Most investors will give a resounding no to this question as it might sometimes get very complex to purchase and even value the investment. Also, most times, RMD is required for distribution. You would also need to get a lawyer who would assess the contract of the custodian from time to time.

Some persons often conclude it isn’t worth the stress once all these are considered. However, for accredited investors, investments like these are great.

An investor would have to meet either of the below requirements before they can be considered accredited:

  • Must earn above 200,000 dollars income (could also be 300,000 dollars cumulative income with their spouse) yearly in the previous 2 years. They would also be reasonably expecting the same amount in the present year.


  • Their net worth is above 1 million dollars. This can be alone or with their spouse. The individual’s primary residence value will also not be included in this net worth.

So What Can Work?

Regardless of what has been discussed above certain options can still work when it comes to this investment choice. Below are some:

1. ROBs

ROB is an acronym for Rollover as Business Start-Up. This is when an investor rolls over the funds in a 401(k) to their IRA and then uses the funds to establish a business. This way, an investor can have a business that was funded with their retirement assets.

Usually, this plan does not go against IRS prohibited transaction laws. However, the plan is usually heavily scrutinized by IRS to ensure they follow the somewhat complex rules.

2. Gold

Holding physical gold in IRAs is becoming more popular by the day. This option, however, can be quite expensive. This may be due to the fees that have to be paid to set up the account and keep it running.

To get a precious metal account, you would have to first get a custodian that will oversee the transactional aspect of the investment. This custodian would collect a fee for services rendered. After that, when the precious metal is bought, a depository will have to be paid for.

This is because the IRS doesn’t allow precious metals bought with IRA funds to be stored by individuals as they are considered collectibles. You can visit https://goldco.com/precious-metals-ira/gold-ira/if you are interested in a gold IRA and would like to learn more about getting an account.

3. Private Placements

Private placements also called unregistered offering refer to securities that offer exempt from SEC registration. This is also another perfect choice if you are considering getting an unconventional asset in your IRA portfolio.

Putting your own company in your IRA may not make sense. But, if an investor were to be offered shares in a small business or firm in which they aren’t involved in, then that might just be right.

However, if you choose this, then we advise you to use a separate IRA for the investment.

4. Real Estate

The laws governing IRAs are not against real estate investments. Yet, trustees don’t have to offer this option either. Hence, some brokerage may not allow a real estate investment like a rental property in an IRA.

But, some advisers, trustees, and custodians specialize in self-directed individual retirement accounts. These accounts allow investors to invest in any form of investments which the law allows like real estate. These experts (custodians and trustees) will among other services often help investors know how to make real estate investments with their IRA. They will also help you to value the property and remove certain worries you may have about this unconventional asset investment.

As with private placements, if you choose this option, then we suggest that you create a new account each time you want to make a new investment.

5. Bitcoin

In recent times, most people have started investing bitcoin in IRAs. You can read this to learn more about bitcoin. This is a relatively new development, and bitcoin is quite volatile. So our advice is that you tread with caution if you must.


In this article, we have explored some very interesting options available to you when it comes to unconventional assets and IRAs.

Photo by Zlaťáky.cz from Pexels

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