What Can’t My IRA Invest In?


Exploring the allowable and non-allowable investment options for your IRA can be a bit overwhelming. In addition, the numerous IRA types and regulations surrounding them can be daunting.

Generally, most IRA types are designed to hold traditional investments such as stocks, bonds, and certificates of deposit, among others. However, for investors who wish to diversify their portfolio with alternative investments like real estate, precious metals, and cryptocurrencies, a self-directed IRA can be an ideal platform.

Nevertheless, there are some restrictions to the types of investments a self-directed IRA can hold, which are imposed by IRA rules.


Specific Types of Retail

Real estate investments can be an excellent option for smart investors looking to grow their retirement portfolio through a self-directed IRA. However, certain limitations exist. Although investment properties are permissible, any property directly owned or used by the investor or their family members is not allowed to go into the retirement account. What does this entail?

It means that your present residence or any vacation property used by family members, including those used for business purposes like Airbnb, cannot be sold to your self-directed IRA. The underlying principle is that any property that you or your family benefit from in some way cannot be included in your retirement account.

The IRS created “prohibited transaction rules to prevent IRA owners from utilizing their retirement account for personal gain .  As such, (move the sentence below up)it is worth noting that if you own properties beneficial to yourself or lineal family, including grandparents and grandchildren, you cannot include those properties in your retirement account.


Certain Precious Metals

Incorporating precious metals, such as gold, into a self-directed IRA can be a profitable move, but certain requirements need to be met. The most crucial standard for inclusion is purity.

For instance, gold held in a retirement account must attain a purity level of at least 99.5% to qualify. Certain coins with lower purity levels may also qualify, and custodians that offer this asset, like Digital Trust, can provide guidance for suitable options for a self-directed IRA.



According to the IRS, collectibles are not permissible investments for Individual Retirement Arrangements (IRAs), as outlined in IRS Publication 590-B. This includes items like collectible cars or Fabergé eggs, which cannot be part of a self-directed retirement account.

Furthermore, the publication specifies that using retirement money to purchase a collectible will be deemed a distribution for that year.


Life Insurance

Investment-oriented life insurance products exist that incorporate the features of an investment vehicle. These plans allocate a portion of each payment to death benefits and another portion to a cash account.

The cash account is tax-advantaged and invested like an IRA. However, the cash account portion of life insurance cannot be transferred to your IRA.


Understand the IRA Rules to Diversify a Retirement Portfolio with Alternative Assets

Although certain items and investments are not permissible for inclusion in a self-directed IRA, investors still have access to many excellent choices. Digital Trust provides a broad range of options, ranging from cryptocurrencies to LLCs. Their experienced staff can help you get started with the alternative investment options of your preference. Achieve diversification today with Digital Trust.