What’s in a Word: “Insert Alternative Asset Here” IRA
Has anyone noticed that lately there seem to be intriguing alternative asset IRA options popping up all over the place? An internet search for “alternative IRA” yields a whole host of colorful results. You can invest in property using a “real estate IRA” or hold gold in a “precious metals IRA.” You can even fund a startup through a new “crowdfunding IRA.” No matter what your favorite asset type is, it seems like there’s an IRA for that – and if not, it’s probably coming soon.
As compelling as this trend may be, it’s also a little bit confusing. Because technically, in the eyes of the IRS, there’s no such thing as a “real estate IRA” or a “precious metals IRA.” Of course, the IRS will distinguish between traditional, Roth, SEP and SIMPLE IRAs, but if you denote a “crowdfunding IRA” on your tax return forms, it would only confuse them.
That’s because the IRS actually says it’s okay for investors to use any IRA to hold alternative assets – including things like property, private equity and commodities. Some IRA custodians and administrators only allow certain asset types, but their decision to do so is just that – their decision.
In fact, just as some companies choose to narrow their focus down to select alternative assets (e.g., “Gold IRA”), a much larger portion of big broker dealers won’t allow non-exchange traded alternatives in IRAs at all. But again, that’s not an IRS rule – that’s a business choice, usually made because they don’t want to deal with the extra paperwork, processes and expertise that are necessary in order to custody alternative assets.
But here’s the thing - whether you want to use your IRA to invest in a specific alternative asset or to invest in a wide array of assets, you can do both of those things in one place using a PENSCO IRA. At PENSCO, we skip the gimmicks and just give you the IRA, along with the option to invest in anything allowable by the IRS. You don’t need a special IRA to invest in – you just need PENSCO.
Think of it as a “Choose Your Own Asset" IRA.