IRS Allowable Investments

• The IRS allows investments in real estate, private placements, LLCs and options. Prohibited assets that will trigger a taxable event are collectibles such as artwork, antiques, stamps, coins and metals. Most banks and brokerage firms don't allow nonbank or equity investments because of the reporting required, not because it is illegal. Savvy investors who understand the rules often seek a method that allows them to diversify investments. This is where the Rescue IRA comes into play.
  
  

The Strategy Itself

• To purchase IRS-allowed investments that aren't offered by your existing custodian, you can simply roll the assets into a new custodian that does offer this. A rollover is easily accomplished by opening a new account at an IRA custodian, such as Entrust or Pensco, which allows nontraditional assets, and depositing the check within the 60-day rollover time frame. You can also transfer the assets, but this may take a bit longer than a rollover since it is conducted from custodian to custodian. If you wish to invest in collectibles not allowed in your IRA, you may wish to create an LLC. The LLC can invest in anything it wants to where the IRA is the investor in the LLC. Since LLCs have a pass-through tax structure and IRAs are tax-deferred or tax-free, you are eliminating the annual taxes on appreciation and liquidation of assets. Be sure you consult an attorney to structure this properly as the law was defined by Swanson vs. Commissioner.