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Do IRAs Get Audited?


Yes, your IRA can get audited by the Internal Revenue Service, and yes, you need the best audit protection for your Self-Directed IRA. So, do IRAs get audited? It’s true, they can. When you’re looking at retirement accounts, it’s important to do what works best for you while choosing a provider that offers the best audit protection in the industry. Don’t believe us? Just ask Investopedia.

According to the Government Accountability Office, the IRS could “provide better guidance” regarding audits of IRAs and how to remain compliant so that account owners do not fall into non-compliance. Could a Self-Directed IRA be just the thing for you?

Self-Directed IRA is a retirement account that allows you to invest in traditional and alternative investments. Frequently, large financial institutions that manage retirement accounts limit investment opportunities to stocks, bonds, and mutual funds. A Self-Directed IRA allows you to invest in almost anything. In fact, there are only three things you cannot invest in: life insurance, collectibles, and transactions with a disqualified person.

Many investors open a Self-Directed IRA to diversify their retirement funds.

Related: Self-Directed IRA Investments

What About IRA Audits?

Interestingly enough, the IRS doesn’t have a department that specifically deals with IRAs. Therefore, there are no exact statistics to go by. IRA custodians file Form 5498 showing the value of IRAs. No specifics are given, just generic numbers about how funds are invested. But yes, IRAs get audited, too.

The Government Accountability Office recently issued a report about IRAs and the need to educate the IRS more about the plans and investments made. From that report: “Noncompliance involving IRAs with unconventional assets is generally detected through labor-intensive audits of individual taxpayers. IRS’s SB/SE division uses field audits to pursue complex individual tax return cases, including those that could involve IRAs with unconventional assets. …from fiscal years 2012 to 2016, IRS audited about 26,000 tax returns with IRA issues.”

Audits were conducted and those performing them inquired about retirement plans. That number of audits for IRA plans were discovered across millions of regular audits that occurred in that time frame.

Retirement plans are all about saving on taxes, but you do have to pay them at some point. So long as you’re not trying to hide anything from the IRS and you’re not doing anything illegal, you will be fine. Yes, an audit can create stress, but they’re not all that scary if you are prepared for one. Don’t let that minuscule risk deter you from investing the way you want. You are not at any more risk if you choose to invest in real estate with IRA Financial than you are when investing in stocks at your local bank! The difference is IRA Financial has the best audit protection in the nation. Learn more about us here.


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