Client Considering Using His IRA For an Unconventional Investment?Client Considering Using His IRA For an Unconventional Investment?
Wealthy clients often ask advisors whether they should use their individual retirement accounts for unconventional investments. And now that the equity and debt markets have experienced significant volatility, clients may be even more interested in going beyond such common investments as publicly traded stocks and bonds, mutual funds and annuity contracts to venture into commercial or residential
Thomas C. Foster
Wealthy clients often ask advisors whether they should use their individual retirement accounts for unconventional investments. And now that the equity and debt markets have experienced significant volatility, clients may be even more interested in going beyond such common investments as publicly traded stocks and bonds, mutual funds and annuity contracts to venture into commercial or residential real estate, interests in closely held businesses, hedge funds, tangible personal property, etc.
But on top of the normal risk/return/diversification analysis that advisors apply to all proposed investments, unconventional investments that will be held in IRAs must be evaluated considering certain additional criteria, including:
Are the investments statutorily proscribed for IRAs?
Are they prohibited transactions (Pts) vis-a-vis the IRA owner?
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