Earned income is a requirement to contribute to a traditional IRA, and your annual contributions to an IRA cannot exceed what you earned that year. The law doesn't allow IRA funds to be invested in life insurance or collectible items. You can invest in a traditional IRA no matter how much money you make. The main issue of the rules governing IRA investments is that Congress wants IRA money to be used for retirement and wisely invested so that it is there when needed.
An investor in an IRA can take advantage of real estate purchased in an IRA if the transaction is carefully structured. Fortunately, the original owners of Roth IRAs are exempt from the RMD rules, but beneficiaries who inherit a Roth IRA are generally required to accept distributions, and those rules depend on several factors. To be safe, public accountants should emphasize investment vehicles for which established markets exist, such as stocks, mutual funds, bonds, bank certificates of deposit, annuities (although they may not be the best for an IRA, since IRA funds are already protected against taxes), real estate and select currencies. The list of investment instruments that cannot be included in an IRA or a qualified plan should not be confused with the list of prohibited transactions that cannot be made with these accounts, such as lending money from an IRA.
For example, naming a beneficiary to a trust instead of a spouse eliminates the surviving spouse's ability to transfer the IRA in their name to take advantage of the IRA's ownership rules. IRA investments in other unconventional assets, such as limited liability companies and real estate, risk disqualifying the IRA due to prohibited transaction rules that prohibit self-trading. For example, due to administrative burdens, many IRA trustees don't allow IRA owners to invest IRA funds in real estate.