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Can I buy Life Insurance Contracts or Life Settlement Contracts with a Self-Directed IRA?

Internal Revenue Code section 408(a)(3) requires that “no part of trust [IRA] funds will be invested in life insurance contracts.” This means that the Internal Revenue Service may not allow you the tax benefits of an IRA if you invest in a life settlement contract.  Hence, IRA funds may not be used to purchase life insurance or life settlement contracts.  Using a Self-Directed IRA to purchase life insurance contracts would trigger an IRS prohibited transaction.

To learn more about the IRS prohibited transaction rules, please contact a retirement expert at 800-472-0646.

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Posted in IRA Financial Group, Self-Directed IRA